Insurance Code — Part 11 | INS — United States — California law | Esheria

Insurance Code

Part 11 of 23 · provisions 2,001–2,200

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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. 12146.

    ## 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 “emergency road service” as a motor club’s adjustment, repair, or replacement of a vehicle’s equipment, tires, or mechanical parts so the vehicle can run on its own power.

    ## 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. ) ## 12146. Emergency road service is the adjustment, repair or replacement by a motor club of the equipment, tires or mechanical parts of a motor vehicle so as to permit it to be operated under its own power. (Enacted by Stats. 1935, Ch. 145.)
  2. 12148.

    ## 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 “discount service” is a motor club arrangement that gives special discounts, rebates, or price reductions on certain vehicle-related goods or services to holders of service contracts.

    ## 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. ) ## 12148. Discount service is an arrangement by a motor club resulting in giving special discounts, rebates or reductions of price on gasoline, oil, repairs, insurance, parts, accessories or service for motor vehicles to holders of service contracts with any such club. (Enacted by Stats. 1935, Ch. 145.)
  3. 12149.

    ## 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 financial service is an arrangement where the club makes loans or other money advances to holders of its service contracts.

    ## 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. ) ## 12149. Financial service is an arrangement by a motor club whereby loans or other advances of money are made to holders of service contracts with any such club. (Enacted by Stats. 1935, Ch. 145.)
  4. 1215.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    This section defines key terms used in the Insurance Holding Company System Regulatory Act.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215. As used in this article, the following terms shall have the respective meanings hereafter set forth, unless the context shall otherwise require: (a) An “affiliate” of, or person “affiliated” with, a specific person, is a person that directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. (b) “Business day” is any day other than Saturday, Sunday, and any other day that is specified or provided for as a holiday in the Government Code. (c) “Commissioner” means the Insurance Commissioner of the state and any assistant to the Insurance Commissioner designated and authorized by the commissioner while acting under their designation as the Insurance Commissioner. (d) The term “control” includes the terms “controlling,” “controlled by,” and “under common control with,” and means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, more than 10 percent of the voting securities of any other person. This presumption may be rebutted by a showing that control does not exist in fact pursuant to the filing of a disclaimer of affiliation in accordance with subdivision (l) of Section 1215.4. The commissioner may, after furnishing all persons in interest notice and opportunity to be heard, determine that control exists in fact, notwithstanding the absence of a presumption to that effect. (e) “Enterprise risk” means any activity, circumstance, or event or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including, but not limited to, anything that would cause the insurer’s risk-based capital to fall into company action level as set forth in Article 4.1 (commencing with Section 739) of Chapter 1 and under Section 739.5 or would cause the insurer to be in hazardous financial condition and allow the commissioner to take actions that are necessary under Article 14 (commencing with Section 1010), Article 14.3 (commencing with Section 1064.1), and Article 15.5 (commencing with Section 1077). (f) “Group capital calculation instructions” means the group capital calculation instructions as adopted by the NAIC and as amended by the NAIC in accordance with the procedures adopted by the NAIC. (g) “Groupwide supervisor” means the insurance official authorized to engage in conducting and coordinating groupwide supervision activities who is determined or acknowledged by the commissioner pursuant to subdivision (a) of Section 1215.75 to have sufficient significant contacts with the internationally active insurance group. (h) An “insurance holding company system” consists of two or more affiliated persons, one or more of which is an insurer. (i) “Insurer” shall have the same meaning as set forth in Section 826, excluding subdivisions (e) and (f) of that section. (j) “Internationally active insurance group” means an insurance holding company system that includes an insurer registered pursuant to Section 1215.4 and that meets the following criteria: (1) Insurers that are part of the insurance holding company system write premiums in at least three countries. (2) The percentage of gross premiums written outside the United States is at least 10 percent of the insurance holding company system’s total gross written premiums. (3) Based on a three-year rolling average, the total assets of the insurance holding company system are at least fifty billion dollars ($50,000,000,000) or the total gross written premiums of the insurance holding company system are at least ten billion dollars ($10,000,000,000). (k) “NAIC” means the National Association of Insurance Commissioners. (l) The “NAIC Liquidity Stress Test Framework” is an NAIC publication that includes a history of the NAIC’s development of regulatory liquidity stress testing, the scope criteria applicable for a specific data year, and the liquidity stress test instructions and reporting templates for a specific data year. The scope criteria, instructions, and reporting template may be adopted by the NAIC and amended by the NAIC in accordance with the procedures adopted by the NAIC. (m) “Person” is an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a business trust, an unincorporated organization, or any similar entity, or any combination thereof acting in concert. (n) “Scope criteria,” as detailed in the NAIC Liquidity Stress Test Framework, are the designated exposure bases along with minimum magnitudes thereof for the specified data year, which are used to establish a preliminary list of insurers considered scoped into the NAIC Liquidity Stress Test Framework for that data year. (o) A “security holder” of a specified person is the holder that owns any security of that person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing. (p) A “subsidiary” of a specified person is an affiliate controlled by that person directly, or indirectly through one or more intermediaries. (q) “Voting security” shall include any security convertible into or evidencing a right to acquire a voting security. (Amended by Stats. 2021, Ch. 464, Sec. 1. (AB 494) Effective January 1, 2022.)
  5. 1215.1.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    A domestic insurer may organize or buy subsidiaries and make certain investments in them, but the investments are limited and may require commissioner 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.1. (a) Any domestic insurer, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries subject to the limitations of this section. (b) In addition to investments in common stock, preferred stock, debt obligations, and other securities permitted under all other sections of this chapter, a domestic insurer may also do one or more of the following: (1) Invest in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, amounts that do not exceed the lesser of 10 percent of the insurer’s assets or 50 percent of the insurer’s surplus as regards policyholders. However, after these investments, the insurer’s surplus as regards policyholders shall be reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs. In calculating the amount of these investments, there shall be excluded investments in insurance subsidiaries, and there shall be included (A) total net moneys or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities, and (B) all amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities and all contributions to the capital or surplus of a subsidiary subsequent to its acquisition or formation. “Insurance subsidiary” is an insurer that is organized within the United States and is controlled, directly or indirectly, by a reporting insurer subject to this article. For purposes of this paragraph, “investments in insurance subsidiaries” shall include the following: (A) Any direct investment in an insurance subsidiary. (B) The insurer’s proportionate share of any investment in an insurance subsidiary held by any subsidiary of the insurer. This shall be calculated by multiplying the amount of the subsidiary’s investment in the insurance subsidiary by the insurer’s percentage of ownership of the subsidiary. (2) Invest any amount in common stock, preferred stock, debt obligations, and other securities of one or more subsidiaries, provided that each subsidiary agrees to limit its investments in any asset so that these investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations specified in paragraph (1) or in this chapter applicable to the insurer. For the purpose of this paragraph, “the total investment of the insurer” shall include (A) any direct investment by the insurer in an asset, and (B) the insurer’s proportionate share of any investment of an asset by any subsidiary of the insurer, which shall be calculated by multiplying the amount of the subsidiary’s investment by the percentage of the insurer’s ownership of that subsidiary. (3) With the approval of the commissioner, invest any amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries, provided that after this investment the insurer’s surplus as regards policyholders shall be reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs. (c) Investments in common stock, preferred stock, debt obligations, or other securities of subsidiaries made pursuant to subdivision (b) shall neither limit nor be subject to any of the otherwise applicable authorizations, restrictions, or prohibitions contained in this article applicable to these investments of insurers. (d) Whether any investment pursuant to subdivision (b) meets the applicable requirements thereof is to be determined immediately after the investment is made, taking into account the then outstanding principal balance on all previous investments in debt obligations, and the value of all previous investments in equity securities as of the date they were made. (e) If an insurer ceases to control a subsidiary, it shall dispose of any investment therein made pursuant to this section within three years from the time of the cessation of control, or within any further time as the commissioner may prescribe, unless at any time after the investment has been made, the investment has met the requirements for investment under any other section of this part. (Amended by Stats. 2015, Ch. 213, Sec. 3. (AB 553) Effective August 17, 2015.)
  6. 1215.10.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    The commissioner may go to court to stop violations of this article or related commissioner orders, and certain securities acquired in violation may not be voted or counted for quorum.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.10. (a) Whenever it appears to the commissioner that any insurer or any director, officer, employee, or agent thereof has committed or is about to commit a violation of this article or of any rule, regulation, or order issued by the commissioner hereunder, the commissioner may apply to the superior court for the county in which the principal office of the insurer is located, or if such insurer has no such office in this state, then to the Superior Court for the County of Los Angeles, or for the City and County of San Francisco, for an order enjoining such insurer or such director, officer, employee, or agent thereof from violating or continuing to violate this article or any such rule, regulation, or order, and for such other equitable relief as the nature of the case and the interests of the insurer’s policyholders, creditors, and shareholders or the public may require. (b) No security which is the subject of any agreement or arrangement regarding acquisition, or which is acquired or to be acquired in contravention of the provisions of this article or of any rule, regulation, or order issued by the commissioner hereunder, may be voted at any shareholders’ meeting, or may be counted for quorum purposes, and any action of shareholders requiring the vote of an affirmative percentage of shares may be taken as though such securities were not issued and outstanding. If an insurer or the commissioner has reason to believe that any security of the insurer has been or is about to be acquired in contravention of the provisions of this article or of any rule, regulation, or order issued by the commissioner hereunder, the insurer or the commissioner may apply to the Superior Court for the County of Los Angeles or for the City and County of San Francisco or to the superior court for the county in which the insurer has its principal place of business for equitable relief to enjoin the voting of any such security or to void any vote of such security already cast, at any meeting of shareholders. (Added by renumbering Section 1215.9 by Stats. 2012, Ch. 282, Sec. 10. (SB 1448) Effective January 1, 2013.)
  7. 1215.11.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    This section imposes late fees, forfeitures, fines, and possible criminal action for untimely, improper, or willfully false filings and violations under the article.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.11. (a) Any insurer that fails to file a statement, report, or request for approval required by this article in a timely manner shall be subject to the late filing fees set forth in Section 924. (b) Every director or officer of an insurance holding company system who knowingly violates, participates in, or assents to, or who knowingly permits any of the officers or agents of the insurer to engage in transactions or make investments which have not been properly reported or submitted pursuant to Sections 1215.4 and 1215.5, or which violate this article, shall pay, in their individual capacity, a civil forfeiture of not more than fifty thousand dollars ($50,000) per violation, after notice and hearing before the commissioner. In determining the amount of the civil forfeiture, the commissioner shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and any other matters as justice may require. (c) Whenever it appears to the commissioner that any insurer subject to this article or any director, officer, employee, or agent thereof has engaged in any transaction or entered into a contract which is subject to Section 1215.5 and which would not have been approved had approval been requested, the commissioner may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and hearing the commissioner may also order the insurer to void any contracts and restore the status quo if this action is in the best interest of the policyholders, creditors, or the public. (d) Whenever it appears to the commissioner that any insurer or any director, officer, employee, or agent thereof has committed a willful violation of this article, the commissioner may cause criminal proceedings to be instituted in the county in which the principal office of the insurer is located, or if such insurer has no such office in the state then by the Attorney General against such insurer or the responsible director, officer, employee, or agent thereof. Any insurer which willfully violates this article shall be fined not more than ten thousand dollars ($10,000). Any individual who willfully violates this article shall be fined not more than three thousand dollars ($3,000) or, if such willful violation involves the deliberate perpetration of a fraud upon the commissioner, imprisoned pursuant to subdivision (h) of Section 1170 of the Penal Code, or both. (e) Whenever it appears to the commissioner that any person has committed a violation of Section 1215.4 that prevents the full understanding of the enterprise risk to the insurer by affiliates or by the insurance holding company system, the violation may serve as an independent basis for disapproving dividends or distributions or for placing the insurer under an order of supervision in accordance with Article 14 (commencing with Section 1010) of Chapter 1. (f) Any officer, director, or employee of an insurance holding company system who willfully and knowingly subscribes to or makes or causes to be made any materially false statements, reports, or filings with the intent to deceive the commissioner in the performance of his or her duties under this article, upon conviction thereof, shall be fined not more than three thousand dollars ($3,000) or, if the willful violation of this subdivision involves the deliberate perpetration of a fraud upon the commissioner, imprisoned pursuant to subdivision (h) of Section 1170 of the Penal Code, or both that imprisonment and fine. Any fines imposed shall be paid by the officer, director, or employee in his or her individual capacity. (Added by renumbering Section 1215.10 by Stats. 2012, Ch. 282, Sec. 11. (SB 1448) Effective January 1, 2013.)
  8. 1215.12.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    If the commissioner thinks someone violated this article and the violation threatens a domestic insurer’s financial condition, the commissioner may take possession of the insurer’s property and run its business.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.12. Whenever it appears to the commissioner that any person has committed a violation of this article which so impairs the financial condition of a domestic insurer as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, shareholders, or the public, then the commissioner may proceed as provided in Article 14 (commencing with Section 1010) of Chapter 1 of this part to take possession of the property of the domestic insurer and to conduct the business thereof. (Added by renumbering Section 1215.11 by Stats. 2012, Ch. 282, Sec. 12. (SB 1448) Effective January 1, 2013.)
  9. 1215.13.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    If the commissioner finds a violation of this article that makes an insurer’s continued operation contrary to policyholders’ or the public’s interests, the commissioner may suspend, revoke, or refuse to renew the insurer’s license or authority to do business in this state after notice and an opportunity to be heard.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.13. Whenever it appears to the commissioner that any person has committed a violation of this article which makes the continued operation of an insurer contrary to the interests of policyholders or the public, the commissioner may, after giving notice and an opportunity to be heard, suspend, revoke, or refuse to renew that insurer’s license or authority to do business in this state for the period that he or she finds is required for the protection of policyholders or the public. (Added by renumbering Section 1215.12 by Stats. 2012, Ch. 282, Sec. 13. (SB 1448) Effective January 1, 2013.)
  10. 1215.14.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    Certain foreign insurers meeting California premium criteria are treated as commercially domiciled insurers, and the commissioner may exempt some of them.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.14. (a) For the purposes of this article only, every foreign insurer, except an insurer described in Article 2 (commencing with Section 12350) of Chapter 1 of Part 6 of Division 2, that is authorized to do business in this state and that, during its three preceding fiscal years taken together, or during any lesser period of time if it has been licensed to transact its business in California only for such lesser period of time, has written an average of more direct premiums in the State of California than it has written in its state of domicile during the same period, and those direct premiums written constitute 33 percent or more of its total direct premiums written everywhere in the United States for that three-year or lesser period, as reported in its three most recent annual statements, shall be deemed a “commercially domiciled insurer” within the State of California. (b) The commissioner may exempt from the provisions of this article any commercially domiciled insurer made subject to this article by subdivision (a) if he or she determines that it has a sufficiently large amount of assets and the evidences of title thereto physically located in California, or that the ratio of those assets to its California policyholder liability is sufficiently large, as to justify the conclusion that there is no reasonable danger that the operations or conduct of the business of the insurer could present a danger of loss to California policyholders. The commissioner may also exempt from the provisions of this article any commercially domiciled insurer made subject to this article by subdivision (a) under the circumstances that he or she deems appropriate. (c) This section does not exempt any foreign insurer that is authorized to do business in this state, including a commercially domiciled insurer, from the provisions of any other sections of this article that may be applicable to the insurer. (Added by renumbering Section 1215.13 by Stats. 2012, Ch. 282, Sec. 14. (SB 1448) Effective January 1, 2013.)
  11. 1215.15.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    This section excludes certain pre-December 31, 1978 transactions from the article and says the Section 1215.4 registration requirement first applies to covered home protection companies on January 1, 1980.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.15. (a) The provisions of this article shall not apply to any party or entity participating in any investment by a home protection company in its subsidiary or affiliate or any debt or security instruments thereof, an effectuation or attempt to effectuate an acquisition of control or a liquidation of, or merger with, a home protection company, or any material transaction by a home protection company with its affiliate if the investment, effectuation, attempt, or transaction occurred prior to December 31, 1978. (b) The registration required by Section 1215.4 shall first be applicable to home protection companies who are members of an insurance holding company system on January 1, 1980. (Added by renumbering Section 1215.13 1/2 by Stats. 2012, Ch. 282, Sec. 15. (SB 1448) Effective January 1, 2013.)
  12. 1215.16.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    State laws that conflict with this article are superseded for matters covered by 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.16. All laws and parts of laws of this state inconsistent with this article are hereby superseded with respect to matters covered by this article. (Added by renumbering Section 1215.14 by Stats. 2012, Ch. 282, Sec. 16. (SB 1448) Effective January 1, 2013.)
  13. 1215.17.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    If part of this article is held invalid, the rest of the article still remains effective if it can work without the invalid part.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.17. If any provision of this article or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of this article which can be given effect without the invalid provision or application, and for this purpose the provisions of this article are severable. (Added by renumbering Section 1215.15 by Stats. 2012, Ch. 282, Sec. 17. (SB 1448) Effective January 1, 2013.)
  14. 1215.18.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    If a domestic insurer enters liquidation or rehabilitation, the receiver may recover certain distributions and payments made in the prior year from controlling entities and related persons, subject to stated limitations.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.18. (a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under that order shall have a right to recover on behalf of the insurer (1) from any parent corporation or holding company or person or affiliate who otherwise controlled the insurer, the amount of distributions other than distributions of shares of the same class of stock paid by the insurer on its capital stock, or (2) any payment in the form of a bonus, termination settlement, or extraordinary lump sum salary adjustment made by the insurer or its subsidiary to a director, officer, or employee, where the distribution or payment pursuant to (1) or (2) is made at any time during the one year preceding the petition for liquidation, conservation, or rehabilitation, as the case may be, subject to the limitations of subdivisions (b), (c), and (d). (b) No distribution shall be recoverable if the parent or affiliate shows that when paid the distribution was lawful and reasonable, and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations. (c) Any person who was a parent corporation or holding company or a person who otherwise controlled the insurer or affiliate at the time the distributions were paid shall be liable up to the amount of distributions or payments under subdivision (a) that the person received. Any person who otherwise controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions he or she would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable. (d) The maximum amount recoverable under this section shall be the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds. (e) To the extent that any person liable under subdivision (c) is insolvent or otherwise fails to pay claims due from it pursuant to that subdivision, its parent corporation or holding company or person who otherwise controlled it at the time the distribution was paid, shall be jointly and severally liable for any resulting deficiency in the amount recovered from the parent corporation or holding company or person who otherwise controlled it. (Added by renumbering Section 1215.16 by Stats. 2012, Ch. 282, Sec. 18. (SB 1448) Effective January 1, 2013.)
  15. 1215.2.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    A person generally may not try to acquire control of a domestic insurer without first filing a required statement with the commissioner and sending it to the insurer; the commissioner can require more information, approve or block the transaction, and charge a $5,642 filing fee.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.2. (a) A person shall not make a tender offer for, or a request or invitation for tenders of, or enter into an agreement to exchange securities for or acquire in the open market, any voting security, or any security convertible into a voting security, of a domestic insurer or of any other person controlling a domestic insurer, if the other person is not substantially engaged either directly or through its affiliates in any businesses other than that of insurance, if, as a result of the consummation thereof, the person would, directly or indirectly, acquire control of the insurer, and a person shall not enter into an agreement to merge with or otherwise to acquire control of a domestic insurer, unless, at the time copies of the offer, purchase, request, or invitation are first published, sent, or given to security holders or the agreement or transaction is entered into, as the case may be, the person has filed with the commissioner, and has sent to the insurer, a statement containing the following information, and any additional information as the commissioner may by rule or regulation prescribe as necessary or appropriate in the public interest or for the protection of policyholders or shareholders: (1) The background and identity of all persons by whom or on whose behalf the purchases or the exchange, merger, or other acquisition of control are to be effected. (2) The source and amount of the funds or other consideration used or to be used in making the purchases or in effecting the exchange, merger, or other acquisition of control, and, if any part of the funds or other consideration has been or is to be borrowed or otherwise obtained for the purpose of making the purchases or effecting the exchange, merger, or other acquisition of control, a description of the transaction and the names of the parties thereto. However, where a source of funds is a loan made in the lender’s ordinary course of business, if the person filing the statement so requests, the name of the lender shall not be made available to the public. (3) Any plans or proposals that those persons may have to liquidate the insurer, to sell its assets or merge it with any person, or to make any other major change in its business or corporate structure or management. (4) The amount of each class of voting securities or securities that may be converted into voting securities of the insurer or the controlling person that are beneficially owned, and the amount of each class of voting securities or securities that may be converted into voting securities of the insurer or the controlling person concerning which there is a right to acquire beneficial ownership, by each person and by each affiliate of each person, together with the name and address of each affiliate. (5) Information as to any contracts, arrangements, or understandings with any person with respect to any securities of the insurer or the controlling person, including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies, naming the persons with whom the contracts, arrangements, or understandings have been entered into, and giving the details thereof. All requests or invitations for tenders or advertisements making a tender offer or requesting or inviting tenders of the voting securities of the insurer or the controlling person made by or on behalf of the person, and a copy of the agreement to exchange or otherwise acquire securities or to merge with or otherwise to acquire control of the insurer, shall be filed with the commissioner and sent to the insurer as a part of the statement and shall contain the information contained in the statement as the commissioner may by rule or regulation prescribe. Copies of any additional material soliciting or requesting the tender offers subsequent to the initial solicitation or request, and copies of any amendment to the agreement, shall contain the information as the commissioner may by rule or regulation prescribe as necessary or appropriate in the public interest or for the protection of policyholders or shareholders, and shall be filed with the commissioner and sent to the insurer not later than the time copies of the material are first published or sent or given to security holders or the amendment is entered into. (b) If the person required to file the statement referred to in subdivision (a) is a partnership, limited partnership, syndicate, or other group, the commissioner may require that the information called for by paragraphs (1) to (5), inclusive, of subdivision (a) shall be given with respect to: (1) each partner of the partnership or limited partnership, (2) each member of the syndicate or group, and (3) each person who controls the partner or member. If a person referred to in paragraph (1), (2), or (3) of this subdivision is a corporation or the person required to file the statement referred to in subdivision (a) is a corporation, the commissioner may require that the information called for by paragraphs (1) to (5), inclusive, of subdivision (a) shall be given with respect to the corporation and each officer and director of the corporation and each person who is directly or indirectly the beneficial owner of more than 10 percent of the outstanding voting securities of the corporation. (c) If any tender offer, request, or invitation for tenders, or agreement to exchange or otherwise acquire securities or to merge or otherwise acquire control referred to in subdivision (a), is proposed to be made by means of a registration statement under the federal Securities Act of 1933 (15 U.S.C. Sec. 77a et seq.), or in circumstances requiring the disclosure of similar information under the federal Securities Exchange Act of 1934 (15 U.S.C. Sec. 78a et seq.), or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in subdivision (a) may file that registration statement with the commissioner as full satisfaction of the requirement in subdivision (a). (d) The purchases, exchanges, mergers, or other acquisitions of control referred to in subdivision (a) may not be made until the commissioner approves the purchases, exchanges, mergers, or other acquisitions of control. The commissioner shall approve or disapprove the transaction on or before the latter of 60 days after the statement required by subdivision (a) has been filed with the commissioner or, if a hearing is held pursuant to subdivision (f), 30 days after the close of the hearing held pursuant to subdivision (f). The commissioner may disapprove the transaction if the commissioner finds any of the following: (1) After the change of control the domestic insurer referred to in subdivision (a) could not satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed. (2) The purchases, exchanges, mergers, or other acquisitions of control would substantially lessen competition in insurance in this state or create a monopoly therein. (3) The financial condition of an acquiring person might jeopardize the financial stability of the insurer, or prejudice the interests of its policyholders. (4) The plans or proposals that the acquiring person has to liquidate the insurer, to sell its assets, or to merge it with any person, or to make any other major change in its business or corporate structure or management, are not fair and reasonable to policyholders. (5) The competence, experience, and integrity of those persons who would control the operation of the insurer indicate that it would not be in the interest of policyholders or the public to permit them to do so. (e) The commissioner shall require the payment of five thousand six hundred forty-two dollars ($5,642) as a fee for filing an application pursuant to this section, the amount to accompany the application. The application shall be on a form and in a format prescribed by the NAIC. (f) (1) The commissioner may hold a public hearing after the statement required by subdivision (a) is filed. If a hearing is held, at least 20 days’ notice shall be given by the commissioner to the person filing the statement. Not less than seven days’ notice of the public hearing shall be given by the person filing the statement to the insurer and to other persons as may be designated by the commissioner. At the hearing, the person filing the statement, the insurer, any person to whom notice of hearing was sent, and any other person whose interest may be affected, shall have the right to present evidence, examine and cross-examine witnesses, and offer oral and written arguments, and in connection therewith shall be entitled to conduct proceedings in the same manner as is presently allowed under the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code). All discovery proceedings shall be concluded not later than three days prior to the commencement of the public hearing. (2) If the proposed acquisition of control will require the approval of more than one commissioner, the public hearing referred to in paragraph (1) may be held on a consolidated basis upon request of the person filing the statement referred to in subdivision (a). The person shall file the statement referred to in subdivision (a) with the NAIC within five days of making the request for a public hearing. A commissioner may opt out of a consolidated hearing, and shall provide notice to the applicant of the opt-out within 10 days of the receipt of the statement referred to in subdivision (a). A hearing conducted on a consolidated basis shall be public and shall be held within the United States before the commissioners of the states in which the insurers are domiciled. The commissioners shall hear and receive evidence. Any commissioner may attend the hearing, in person or by telecommunication. (g) This section shall not apply to any offer for or request or invitation for tenders of any voting securities, or any agreement to exchange securities for or otherwise acquire control, if the insurer whose shares are to be acquired remains a direct or indirect subsidiary of the same ultimate controlling company person within the insurer’s insurance holding company system, neither the acquiring person nor any affiliate acquires or incurs any debt, guarantee, or other liability related to the transaction, and no shares are purchased by or sold to a person who is not an affiliated person in that insurance holding company system, or if, and to the extent that, the commissioner, by rule or regulation or by order, exempts the offer, request, invitation, or agreement from the provisions of this section as not comprehended within the purposes thereof. (h) For purposes of this section, any controlling person of a domestic insurer seeking to divest its controlling interest in the domestic insurer, in any manner, shall file with the commissioner, with a copy to the insurer, confidential notice of its proposed divestiture at least 30 days prior to the cessation of control. The commissioner shall determine those instances in which the party or parties seeking to divest a controlling interest in an insurer shall be required to file for and obtain approval of the transaction. The information shall remain confidential until the conclusion of the transaction unless the commissioner, in his or her discretion, determines that confidential treatment will interfere with enforcement of this article. If the statement referred to in subdivision (a) is otherwise filed, this subdivision shall not apply. (Amended by Stats. 2017, Ch. 534, Sec. 28. (AB 1699) Effective January 1, 2018.)
  16. 1215.3.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    This section says certain acts are violations, including failing to file a required statement and trying to acquire control of or merge with a domestic insurer without approval or after disapproval.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.3. The following shall be violations of this article: (a) The failure to file the statement required under subdivision (a) of Section 1215.2. (b) Effectuation or any attempt to effectuate an acquisition or control of, or merger with, a domestic insurer either within the 60-day period referred to in subdivision (d) of Section 1215.2, unless the commissioner has given his approval thereto, or after disapproval of such acquisition of control or merger. (Added by Stats. 1969, Ch. 1275.)
  17. 1215.4.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    Certain insurers in an insurance holding company system must register with the commissioner and file required registration reports on time.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.4. (a) Every insurer that is authorized to do business in this state and that is a member of an insurance holding company system shall register with the commissioner, except a foreign insurer subject to disclosure requirements and standards adopted by statute or regulation in the jurisdiction of its domicile if substantially similar to those contained in this section. The exemption from registration for those foreign insurers shall not apply to any commercially domiciled insurer within this state, as provided in Section 1215.14. Any insurer that is subject to registration under this section shall register within 60 days after the effective date of this article or 15 days after it becomes subject to registration, whichever is later, and annually thereafter by April 30 of each year for the previous calendar year, unless the commissioner for good cause shown extends the time for registration. The commissioner may require a holding company system that is not subject to registration under this section to furnish a copy of the registration statement or other information filed by the insurance company with the insurance regulatory authority of domiciliary jurisdiction. (b) Every insurer subject to registration shall file a registration statement with the commissioner on a form and in a format prescribed by the NAIC, which shall contain current information about the following: (1) The capital structure, general financial condition, ownership, and management of the insurer and any person controlling the insurer. (2) The identity and relationship of every member of the insurance holding company system. (3) The following agreements in force, relationships subsisting, and transactions currently outstanding or that have occurred during the last calendar year between the insurer and its affiliates: (A) Loans, extensions of credit, investments, or purchases, sales, or exchanges of securities of the affiliates by the insurer or of the insurer by its affiliates. (B) Purchases, sales, or exchanges of assets. (C) Transactions not in the ordinary course of business. (D) Guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure of the insurer’s assets to liability, other than insurance contracts entered into in the ordinary course of the insurer’s business. (E) All management agreements, service contracts, and cost-sharing arrangements. However, subscription agreements or powers of attorney executed by subscribers of a reciprocal or interinsurance exchange are not required to be reported pursuant to this section if the form of the agreement was in use before 1943 and was not amended in any way to modify payments, fees, or waivers of fees or otherwise substantially amended after 1943. (F) Reinsurance agreements. (G) Dividends and other distributions to shareholders. (H) Consolidated tax allocation agreements. (4) A pledge of the insurer’s stock, including stock of a subsidiary or controlling affiliate, for a loan made to a member of the insurance holding company system. (5) If requested by the commissioner, the insurer shall include financial statements of or within an insurance holding company system, including all affiliates. Financial statements may include, but are not limited to, annual audited financial statements filed with the United States Securities and Exchange Commission (SEC) pursuant to the federal Securities Act of 1933, as amended, or the federal Securities Exchange Act of 1934, as amended. An insurer required to file financial statements pursuant to this paragraph may satisfy the request by providing the commissioner with the most recently filed parent corporation financial statements that have been filed with the SEC. (6) Statements that the insurer’s board of directors is responsible for overseeing corporate governance and internal controls and that the insurer’s officers or senior management have approved, implemented, and continue to maintain and monitor corporate governance and internal control procedures. (7) Other matters as may be included in registration forms adopted by the NAIC, to the extent otherwise required by the commissioner. (c) All registration statements shall contain a summary outlining all items in the current registration statement that are changes from the prior registration statement. (d) Information does not need to be disclosed on the registration statement filed pursuant to subdivision (b) if the information is not material for the purposes of this section. Unless the commissioner provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments, or guarantees involving one-half of 1 percent or less of an insurer’s admitted assets as of the preceding December 31, are not deemed material for purposes of this section. The description of material in this subdivision does not apply for purposes of the group capital calculation or the NAIC Liquidity Stress Test Framework. (e) Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions within 15 days after the end of the month in which it learns of each change or addition. (f) Subject to subdivision (g) of Section 1215.5, each registered insurer shall report all dividends and other distributions to shareholders within five business days following declaration. A dividend or other distribution to shareholders shall not be paid until at least 10 business days after receipt by the commissioner, at the office of the department prescribed by the commissioner by notice to all insurers, of a notice of the declaration of the dividend or other distribution. (g) Every person in an insurance holding company system subject to registration is required to provide the insurer with all information reasonably necessary to enable the insurer to comply with the provisions of this article. (h) The commissioner shall terminate the registration of any insurer that demonstrates that it no longer is a member of an insurance holding company system. (i) The commissioner may require or allow two or more affiliated insurers subject to registration hereunder to file a consolidated registration statement or consolidated reports amending their consolidated registration statement or their individual registration statements. (j) The commissioner may allow any insurer that is authorized to do business in this state that is part of an insurance holding company system to register on behalf of any affiliated insurer that is required to register under subdivision (a), and to file all information and material required to be filed under this article. (k) The provisions of this section do not apply to any insurer, information, or transaction exempted by the commissioner. (l) Any person may file with the commissioner a disclaimer of affiliation with any authorized insurer. A disclaimer of affiliation may be filed by an insurer or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between the person and the insurer, as well as the basis for disclaiming an affiliation. After a disclaimer has been filed, the insurer is relieved of any duty to register or report under this section that may arise out of the insurer’s relationship with the disclaimed person unless and until the commissioner disallows the disclaimer. The commissioner shall disallow the disclaimer only after furnishing all parties in interest with notice and opportunity to be heard and after making specific findings of fact to support the disallowance. If the commissioner at any time determines that the information disclosed in the disclaimer is incomplete or inaccurate, the commissioner may disallow the disclaimer. (m) The ultimate controlling person of an insurer subject to registration shall also file an annual enterprise risk report. The report shall, to the best of the ultimate controlling person’s knowledge and belief, identify the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The report shall be filed with the lead state commissioner, when applicable, of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the NAIC, and if the commissioner is not the lead state commissioner of the insurance holding company system, a copy shall be provided to the commissioner if the insurance holding company system has an insurer domiciled in this state. The first annual enterprise risk report shall be filed with the insurer’s registration statement after July 1, 2013, unless the commissioner establishes a later date either by bulletin or notice. (n) The ultimate controlling person of an insurer subject to registration shall concurrently file with the registration an annual group capital calculation as directed by the lead state commissioner, except as provided in paragraphs (1) to (4), inclusive. The report shall be completed in accordance with the NAIC Group Capital Calculation Instructions, which may authorize the lead state commissioner to allow a controlling person that is not the ultimate controlling person to file the group capital calculation. The report shall be filed with the lead state commissioner of the insurance holding company system as determined by the commissioner in accordance with the procedures within the Financial Analysis Handbook adopted by the NAIC. All of the following insurance holding company systems are exempt from filing the group capital calculation: (1) An insurance holding company system that has only one insurer within its holding company structure, that only writes business and is only licensed in its domestic state, and that does not assume business from any other insurer. (2) An insurance holding company system that is required to perform a group capital calculation specified by the Federal Reserve Board. The lead state commissioner shall request the calculation from the Federal Reserve Board under the terms of information sharing agreements in effect. If the Federal Reserve Board cannot share the calculation with the lead state commissioner, the insurance holding company system is not exempt from the group capital calculation filing. (3) An insurance holding company system whose non-United States groupwide supervisor is located within a reciprocal jurisdiction, as described in subdivision (a) of Section 922.425, that recognizes the United States’ state regulatory approach to group supervision and group capital. (4) An insurance holding company system that meets both of the following criteria: (A) The insurance holding company system provides information to the lead state commissioner that meets the requirements for accreditation under the NAIC financial standards and accreditation program, either directly or indirectly through the groupwide supervisor, who has determined the information is satisfactory to allow the lead state to comply with the NAIC group supervision approach, as detailed in the Financial Analysis Handbook adopted by the NAIC. (B) The insurance holding company system’s groupwide supervisor that is not located within a reciprocal jurisdiction, as described in subdivision (a) of Section 922.425, recognizes and accepts the group capital calculation as the worldwide group capital assessment for United States insurance groups who operate in that jurisdiction. (i) A non-United States jurisdiction is considered to “recognize and accept” the group capital calculation if it satisfies the criteria in both subclauses (I) and (II): (I) Either of the following is met to satisfy this subclause: (ia) The non-United States jurisdiction recognizes the United States’ state regulatory approach to group supervision and group capital by providing confirmation by a competent regulatory authority in that jurisdiction that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC Accreditation Program are subject only to worldwide prudential insurance group supervision, including worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-United States jurisdiction. (ib) If a United States insurance group does not operate in the non-United States jurisdiction, that non-United States jurisdiction indicates formally in writing to the lead state commissioner with a copy to the International Association of Insurance Supervisors that the group capital calculation is an acceptable international capital standard. (II) The non-United States jurisdiction provides confirmation by a competent regulatory authority in that jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the lead state commissioner in accordance with a memorandum of understanding or similar document between the commissioner and the jurisdiction, including the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC. The commissioner shall determine, in consultation with the NAIC committee process, if the requirements of the information sharing agreements are in force. (ii) A list of non-United States jurisdictions that recognize and accept the group capital calculation shall be published through the NAIC committee process. (I) A list of jurisdictions that recognize and accept the group capital calculation published through the NAIC committee process shall assist the lead state commissioner in determining which insurers shall file an annual group capital calculation. The list shall clarify those situations in which a jurisdiction is exempted from filing pursuant to this paragraph. To assist with a determination pursuant to subdivision (o), the list shall also identify whether a jurisdiction that is exempted under paragraph (3) or this paragraph requires a group capital filing for a United States-based insurance group’s operations in that non-United States jurisdiction. (II) For a non-United States jurisdiction where United States-based insurance groups do not operate, the confirmation provided to meet the requirement of subclause (I) of clause (i) shall serve as support for a recommendation to be published as a jurisdiction that recognizes and accepts the group capital calculation through the NAIC committee process. (III) If the lead state commissioner makes a determination pursuant to this paragraph that differs from the NAIC list, the lead state commissioner shall provide thoroughly documented justification to the NAIC and other states. (IV) Upon a determination by the lead state commissioner that a non-United States jurisdiction no longer meets one or more of the requirements to recognize and accept the group capital calculation, the lead state commissioner may provide a recommendation to the NAIC that the non-United States jurisdiction be removed from the list of jurisdictions that recognize and accept the group capital calculation. (o) (1) Notwithstanding paragraphs (3) and (4) of subdivision (n), a lead state commissioner shall require the group capital calculation for United States operations of any non-United States-based insurance holding company system if, after any necessary consultation with other supervisors or officials, it is deemed appropriate by the lead state commissioner for prudential oversight and solvency monitoring purposes or for ensuring the competitiveness of the insurance marketplace. (2) Notwithstanding the group capital calculation exemptions in subdivision (n), the lead state commissioner may exempt the ultimate controlling person from filing the annual group capital calculation or accept a limited group capital filing or report pursuant to subparagraph (A) or (B). (A) If an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner may exempt the ultimate controlling person from filing the annual group capital calculation if the lead state commissioner makes a determination based upon that filing that the insurance holding company system meets all of the following criteria: (i) The insurance holding company system has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than one billion dollars ($1,000,000,000). (ii) The insurance holding company system does not have insurers within its holding company structure that are domiciled outside of the United States or one of its territories. (iii) The insurance holding company system does not include within its structure a banking, depository, or other financial entity that is subject to an identified regulatory capital framework. (iv) The insurance holding company system attests that there are no material changes in the transactions between insurers and noninsurers in the group that have occurred since the last filing of the annual group capital calculation. (v) The noninsurers within the insurance holding company system do not pose a material financial risk to the insurer’s ability to honor policyholder obligations. (B) If an insurance holding company system has previously filed the annual group capital calculation at least once, the lead state commissioner may accept a limited group capital filing in lieu of the group capital calculation if all of the following criteria are met: (i) The insurance holding company system has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than one billion dollars ($1,000,000,000). (ii) The insurance holding company system does not have insurers within its holding company structure that are domiciled outside of the United States or one of its territories. (iii) The insurance holding company system does not include within its structure a banking, depository, or other financial entity that is subject to an identified regulatory capital framework. (iv) The insurance holding company system attests to both of the following: (I) That there are no material changes in the transactions between insurers and noninsurers in the group that have occurred since the last filing of the annual group capital calculation. (II) That the noninsurers within the insurance holding company system do not pose a material financial risk to the insurer’s ability to honor policyholder obligations. (C) If an insurance holding company has previously met an exemption pursuant to subparagraph (A) or (B), the lead state commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the NAIC Group Capital Calculation Instructions, if an insurer within the insurance holding company system meets any of the following criteria: (i) An insurer is in a risk-based capital action level event as set forth in Article 4.1 (commencing with Section 739) of Chapter 1 or meets a similar standard for a non-United States insurer. (ii) An insurer meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in Section 2598.2 of Title 10 of the California Code of Regulations. (iii) An insurer otherwise exhibits qualities of a troubled insurer, as determined by the lead state commissioner based on unique circumstances including the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests. (D) If the lead state commissioner determines that an insurance holding company system no longer meets one or more of the requirements for an exemption from filing the group capital calculation under this paragraph, the insurance holding company system shall file the group capital calculation at the next annual filing date, unless the lead state commissioner authorizes an extension based on reasonable grounds shown. (p) The ultimate controlling person of an insurer subject to registration and also scoped into the NAIC Liquidity Stress Test Framework shall file the results of a specific year’s liquidity stress test. The filing shall be made to the lead state commissioner of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the NAIC. (1) The NAIC Liquidity Stress Test Framework includes scope criteria applicable to a specific data year. These scope criteria are reviewed at least annually by the NAIC Financial Stability Task Force or its successor. Any change to the NAIC Liquidity Stress Test Framework or to the data year for which the scope criteria are to be measured shall be effective on January 1 of the year following the calendar year when those changes are adopted. Insurers meeting at least one threshold of the scope criteria are considered scoped into the NAIC Liquidity Stress Test Framework for the specified data year unless the lead state commissioner, in consultation with the NAIC Financial Stability Task Force or its successor, determines the insurer should not be scoped into the framework for that data year. Similarly, insurers that do not trigger at least one threshold of the scope criteria are considered scoped out of the NAIC Liquidity Stress Test Framework for the specified data year, unless the lead state commissioner, in consultation with the NAIC Financial Stability Task Force or its successor, determines the insurer should be scoped into the NAIC Liquidity Stress Test Framework for that data year. (2) Because regulators wish to avoid having insurers scoped in and out of the NAIC Liquidity Stress Test Framework on a frequent basis, the lead state commissioner, in consultation with the NAIC Financial Stability Task Force or its successor, shall assess this concern as part of the determination pursuant to paragraph (1). (3) The performance of, and filing of the results from, a specific year’s liquidity stress test shall comply with the NAIC Liquidity Stress Test Framework’s instructions and reporting templates for that year and any lead state commissioner determinations, in conjunction with the NAIC Financial Stability Task Force or its successor, provided within the framework. (q) For purposes of subdivisions (n), (o), and (p), “lead state commissioner” means the Insurance Commissioner, as long as, and only if, California is considered the lead state in accordance with the procedures within the Financial Analysis Handbook adopted by the NAIC. (r) The failure to file a registration statement, summary thereof, amendment to the statement, or report of dividend required by this section within the time specified for the filing is a violation of this article. (Amended by Stats. 2022, Ch. 28, Sec. 116. (SB 1380) Effective January 1, 2023.)
  18. 1215.5.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    Registered insurers must keep affiliate transactions fair, reasonable, and properly documented, and many significant holding-company transactions require advance notice to the commissioner.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.5. (a) Transactions by registered insurers with their affiliates are subject to the following standards: (1) The terms shall be fair and reasonable and consistent with the current version of Section 19 of the NAIC Insurance Holding Company System Model Regulation, subject to the requirements of this article. (2) Charges or fees for services performed shall be reasonable. (3) Expenses incurred and payment received shall be allocated to the insurer in conformity with customary insurance accounting practices consistently applied. (4) The books, accounts, and records of each party to all transactions shall be so maintained as to clearly and accurately disclose the precise nature and details of the transactions, including accounting information that is necessary to support the reasonableness of the charges or fees to the parties. (5) The insurer’s policyholder’s surplus following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs. (b) The following transactions involving a domestic insurer or commercially domiciled insurer, as defined in Section 1215.14, and any person in its insurance holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, may be entered into only if the insurer has notified the commissioner in writing of its intention to enter into the transaction at least 30 days prior thereto, or a shorter period as the commissioner may permit, and the commissioner has not disapproved it within that period. The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer or commercially domiciled insurer. Informal notice shall be reported, within 30 days after a termination of a previously filed agreement, to the commissioner for determination of the type of filing required, if any. The commissioner shall require the payment of two thousand eight hundred twenty-three dollars ($2,823) as a fee for filings pursuant to this subdivision, and the filings shall be on a form and in a format prescribed by the NAIC. The payment shall accompany the filing. (1) Sales, purchases, exchanges, loans, extensions of credit, or investments, if the transactions are equal to or exceed: (A) For a nonlife insurer, the lesser of 3 percent of the insurer’s admitted assets or 25 percent of the policyholder’s surplus as of the preceding December 31. (B) For a life insurer, 3 percent of the insurer’s admitted assets as of the preceding December 31. (2) Loans or extensions of credit to a person who is not an affiliate, if made with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer, if the transactions are equal to or exceed: (A) For a nonlife insurer, the lesser of 3 percent of the insurer’s admitted assets or 25 percent of the policyholder’s surplus as of the preceding December 31. (B) For a life insurer, 3 percent of the insurer’s admitted assets as of the preceding December 31. (3) Reinsurance agreements and pooling agreements and modifications thereto in which the reinsurance premium or a change in the insurer’s liabilities, or the projected reinsurance premium or a change in the insurer’s liabilities in any of the next three years, equals or exceeds 5 percent of the insurer’s policyholder’s surplus, as of the preceding December 31, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer. (4) All management agreements, service contracts, tax sharing agreements, and cost-sharing arrangements. However, subscription agreements or powers of attorney executed by subscribers of a reciprocal or interinsurance exchange are not required to be reported pursuant to this section if the form of the agreement was in use before 1943 and was not amended in any way to modify payments, fees, or waivers of fees or otherwise substantially amended after 1943. Payment or waiver of fees or other amounts due under subscription agreements or powers of attorney forms that were in use before 1943 and that have not been amended in any way to modify payments, fees, or waiver of fees, or otherwise substantially amended after 1943 shall not be subject to regulation pursuant to paragraph (2) of subdivision (a). (5) Guarantees when initiated or made by a domestic or commercially domiciled insurer, provided that a guarantee that is quantifiable as to amount is not subject to the notice requirements of this paragraph unless it exceeds the lesser of one-half of 1 percent of the insurer’s admitted assets or 10 percent of surplus as regards policyholders as of the 31st day of December next preceding. Further, all guarantees that are not quantifiable as to amount are subject to the notice requirements of this paragraph. (6) Derivative transactions or series of derivative transactions. The written filing to the commissioner shall include the type or types of derivative transactions, the affiliate or affiliates engaging with the insurer in the derivative transactions, the objective and the rationale for the derivative transaction or series of derivative transactions, the maximum maturity and economic effect of the derivative transactions, and any other information required by the commissioner. Derivative transactions entered into pursuant to this subdivision shall comply with the provisions of Section 1211. (7) Direct or indirect acquisitions or investments in a person that controls the insurer or in an affiliate of the insurer in an amount that, together with its present holdings in those investments, exceeds 2.5 percent of the insurer’s policyholder’s surplus. Direct or indirect acquisitions or investments in subsidiaries acquired under Section 1215.1, or in nonsubsidiary insurance affiliates that are subject to the provisions of this article, or in subsidiaries acquired pursuant to Section 1199, are exempt from this requirement. (8) Any material transactions, specified by regulation, that the commissioner determines may adversely affect the interests of the insurer’s policyholders. (c) A domestic insurer may not enter into transactions that are part of a plan or series of transactions with persons within the holding company system if the purpose of those transactions is to avoid the statutory threshold amount and thus avoid review. If the commissioner determines that separate transactions were entered into over any 12-month period to avoid review, the commissioner may exercise his or her authority under Section 1215.11. (d) The commissioner, in reviewing transactions under subdivision (b), shall consider whether the transactions comply with the standards set forth in subdivision (a) and whether they may adversely affect the interests of policyholders. (e) The commissioner shall be notified within 30 days of any investment by the insurer in any one corporation if the total investment in the corporation by the insurance holding company system exceeds 10 percent of the corporation’s voting securities. (f) For purposes of this article, in determining whether an insurer’s policyholder’s surplus is reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs, the following factors, among others, shall be considered: (1) The size of the insurer, as measured by its assets, capital and surplus, reserves, premium writings, insurance in force, and other appropriate criteria. (2) The extent to which the insurer’s business is diversified among the several lines of insurance. (3) The number and size of risks insured in each line of business. (4) The extent of the geographical dispersion of the insurer’s insured risks. (5) The nature and extent of the insurer’s reinsurance program. (6) The quality, diversification, and liquidity of the insurer’s investment portfolio. (7) The recent past and projected future trend in the size of the insurer’s investment portfolio. (8) The recent past and projected future trend in the size of the insurer’s surplus, and the policyholder’s surplus maintained by other comparable insurers. (9) The adequacy of the insurer’s reserves. (10) The quality and liquidity of investments in subsidiaries made under Section 1215.1. The commissioner may treat those investments as a disallowed asset for purposes of determining the adequacy of the policyholder’s surplus whenever, in his or her judgment, the investment so warrants. (11) The quality of the company’s earnings and the extent to which the reported earnings include extraordinary accounting items. (g) An insurer, subject to registration under Section 1215.4, shall not pay any extraordinary dividend or make any other extraordinary distribution to its stockholders until 30 days after the commissioner has received notice of the declaration thereof and has approved the payment or has not, within the 30-day period, disapproved the payment. For purposes of this section, an extraordinary dividend or distribution is any dividend or distribution that, together with other dividends or distributions made within the preceding 12 months, exceeds the greater of (1) 10 percent of the insurer’s policyholder’s surplus as of the preceding December 31, or (2) the net gain from operations of the insurer, if the insurer is a life insurer, or the net income, if the insurer is not a life insurer, for the 12-month period ending the preceding December 31. Notwithstanding any other law, an insurer may declare an extraordinary dividend or distribution that is conditional upon the commissioner’s approval. The declaration confers no rights upon stockholders until the commissioner has approved the payment of the dividend or distribution or until the commissioner has not disapproved the payment within the 30-day period referred to in this subdivision. (h) Notwithstanding the control of a domestic insurer by any person, the officers and directors of the insurer shall not thereby be relieved of any obligation or liability to which they would otherwise be subject to by law, and the insurer shall be managed to ensure its separate operating identity consistent with the provisions of this article. However, nothing in this article shall preclude a domestic insurer from having or sharing a common management or cooperative or joint use of personnel, property, or services with one or more other persons under arrangements meeting the standards of subdivision (a). (i) The provisions of this section do not apply to any insurer, information, or transaction exempted by the commissioner. (Amended by Stats. 2017, Ch. 534, Sec. 29. (AB 1699) Effective January 1, 2018.)
  19. 1215.6.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    The commissioner may examine registered insurers and their affiliates, require production of records, and retain experts for the examination. The insurer must pay the examination expense if records are produced under subdivision (a).

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.6. (a) Subject to the limitation contained in this section, and in addition to the powers which the commissioner has under Article 4 (commencing with Section 730) of Chapter 1 of this part relating to the examination of insurers, the commissioner shall also have the power to examine any insurer registered under Section 1215.4 and its affiliates to ascertain the enterprise risk to which the insurer is subjected by the ultimate controlling party, or by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis. The commissioner may also order any insurer registered under Section 1215.4 to produce the records, books, or other information or papers in the possession of the insurer or its affiliates, including a report on the enterprise risk to the insurer by the ultimate controlling party, or by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis, as shall be necessary to ascertain the financial condition or legality of conduct of that insurer. (b) The commissioner shall exercise his or her power under subdivision (a) only if the examination of the insurer under Article 4 (commencing with Section 730) of Chapter 1 of this part is inadequate or the interests of the policyholders of that insurer are being adversely affected. (c) The commissioner may retain at the registered insurer’s expense the attorneys, actuaries, accountants, and other experts not otherwise a part of the commissioner’s staff as shall be reasonably necessary to assist in the conduct of the examination under subdivision (a) of this section. Any persons so retained shall be under the direction and control of the commissioner and shall act in a purely advisory capacity. (d) Each registered insurer producing for examination records, books, and papers pursuant to subdivision (a) shall be liable for, and shall pay the expense of, that examination in accordance with Section 736. (Amended by Stats. 2015, Ch. 213, Sec. 6. (AB 553) Effective August 17, 2015.)
  20. 1215.7.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    The commissioner may take part in supervisory colleges for certain insurers, and those insurers must pay the commissioner’s reasonable participation expenses.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.7. (a) With respect to any insurer registered under Section 1215.4, and in accordance with subdivision (c), the commissioner shall also have the power to participate in a supervisory college for any domestic insurer that is part of an insurance holding company system with international operations in order to determine compliance by the insurer with this article. The powers of the commissioner with respect to supervisory colleges include, but are not limited to, the following: (1) Initiating the establishment of a supervisory college. (2) Clarifying the membership and participation of other supervisors in the supervisory college. (3) Clarifying the functions of the supervisory college and the role of other regulators, including the establishment of a groupwide supervisor. (4) Coordinating the ongoing activities of the supervisory college, including planning meetings, supervisory activities, and processes for information sharing. (5) Establishing a crisis management plan. (b) In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management, and governance processes, and as part of the examination of individual insurers in accordance with Section 1215.6, the commissioner may participate in a supervisory college with other regulators charged with supervision of the insurer or its affiliates, including other state, federal, and international regulatory agencies. A supervisory college may be convened as either a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the insurer or its affiliates. The commissioner may enter into agreements in accordance with subdivision (b) of Section 1215.8 providing the basis for cooperation between the commissioner and the other regulatory agencies, and the activities of the supervisory college. Nothing in this section shall delegate to the supervisory college the authority of the commissioner to regulate or supervise the insurer or its affiliates within its jurisdiction. (c) An insurer registered under Section 1215.4 that is subject to this section shall be liable for and shall, in accordance with Section 736, pay the reasonable expenses of the commissioner’s participation in a supervisory college pursuant to this section, including reasonable travel expenses, limited to those expenses reasonably related to the regulation of the insurer’s business in this state. (Added by Stats. 2012, Ch. 282, Sec. 7. (SB 1448) Effective January 1, 2013.)
  21. 1215.75.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    The commissioner can act as groupwide supervisor for an internationally active insurance group, must identify the supervisor, and may acknowledge another regulator in some cases.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.75. (a) (1) The commissioner is authorized to act as the groupwide supervisor for any internationally active insurance group in accordance with this section. However, the commissioner may otherwise acknowledge another regulatory official as the groupwide supervisor when the internationally active insurance group meets any of the following conditions: (A) Does not have substantial insurance operations in the United States. (B) Has substantial insurance operations in the United States, but not in this state. (C) Has substantial insurance operations in the United States and this state, but the commissioner has determined pursuant to the factors set forth in subdivisions (b) and (f) that the other regulatory official is the appropriate groupwide supervisor. (2) An insurance holding company system that does not otherwise qualify as an internationally active insurance group may request that the commissioner make a determination or acknowledgment as to a groupwide supervisor pursuant to this section. (b) In cooperation with other state, federal, and international regulatory agencies, the commissioner shall identify a single groupwide supervisor for an internationally active insurance group. The commissioner may determine that he or she is the appropriate groupwide supervisor for an internationally active insurance group that conducts substantial insurance operations concentrated in the state. However, the commissioner may acknowledge that a regulatory official from another jurisdiction is the appropriate groupwide supervisor for the internationally active insurance group. The commissioner shall consider all of the following factors when making a determination or acknowledgment pursuant to this subdivision: (1) The place of domicile of the insurers within the internationally active insurance group that hold the largest share of the group’s written premiums, assets, or liabilities. (2) The place of domicile of the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group. (3) The location of the executive offices or largest operational offices of the internationally active insurance group. (4) Whether another regulatory official is acting, or is seeking to act, as the groupwide supervisor under a regulatory system that the commissioner determines to be either of the following: (A) Substantially similar to the system of regulation provided under the laws of this state. (B) Otherwise sufficient in terms of providing for groupwide supervision, enterprise risk analysis, and cooperation with other regulatory officials. (5) Whether another regulatory official acting, or seeking to act, as the groupwide supervisor provides the commissioner with reasonably reciprocal recognition and cooperation. However, a commissioner identified pursuant to this section as the groupwide supervisor may determine that it is appropriate to acknowledge another supervisor to serve as the groupwide supervisor. The acknowledgment of the groupwide supervisor shall be made after consideration of the factors listed in paragraphs (1) to (5), inclusive, and shall be made in cooperation with and subject to the acknowledgment of other regulatory officials involved with supervision of members of the internationally active insurance group, and in consultation with the internationally active insurance group. (c) Notwithstanding any other law, when another regulatory official is acting as the groupwide supervisor of an internationally active insurance group, the commissioner shall acknowledge that regulatory official as the groupwide supervisor. However, if there is a material change in the internationally active insurance group that results in either (1) the internationally active insurance group’s insurers domiciled in this state holding the largest share of the group’s premiums, assets, or liabilities, or (2) this state being the place of domicile of the top-tiered insurer or insurers in the insurance holding company system of the internationally active insurance group, the commissioner shall make a determination or acknowledgment as to the appropriate groupwide supervisor for that internationally active insurance group pursuant to subdivision (b). (d) Pursuant to Section 1215.6, the commissioner is authorized to collect from any insurer registered pursuant to Section 1215.4 all information necessary to determine whether the commissioner may act as the groupwide supervisor of an internationally active insurance group or if the commissioner may acknowledge another regulatory official to act as the groupwide supervisor. Prior to issuing a determination that an internationally active insurance group is subject to groupwide supervision by the commissioner, the commissioner shall notify the insurer registered pursuant to Section 1215.4 and the ultimate controlling person within the internationally active insurance group. The internationally active insurance group shall have not less than 30 days to provide the commissioner with additional information pertinent to the pending determination. The commissioner shall publish on the department’s Internet Web site the identity of internationally active insurance groups that the commissioner has determined are subject to groupwide supervision by the commissioner. (e) If the commissioner is the groupwide supervisor for an internationally active insurance group, the commissioner is authorized to engage in any of the following groupwide supervision activities: (1) Assess the enterprise risks within the internationally active insurance group to ensure both of the following: (A) The material financial condition and liquidity risks to the members of the internationally active insurance group that are engaged in the business of insurance are identified by management. (B) Reasonable and effective mitigation measures are in place. (2) Request, from any member of an internationally active insurance group subject to the commissioner’s supervision, information necessary and appropriate to assess enterprise risk, including, but not limited to, information about the members of the internationally active insurance group regarding any of the following: (A) Governance, risk assessment, and management. (B) Capital adequacy. (C) Material intercompany transactions. (3) Coordinate and, through the authority of the regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compel development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of that internationally active insurance group that are engaged in the business of insurance. (4) Communicate with other state, federal, and international regulatory agencies for members within the internationally active insurance group and share relevant information subject to the confidentiality provisions of Section 1215.8, through supervisory colleges as set forth in Section 1215.7 or otherwise. (5) Enter into agreements with, or obtain documentation from, any insurer registered pursuant to Section 1215.4, any member of the internationally active insurance group, and any other state, federal, and international regulatory agencies for members of the internationally active insurance group, providing the basis for or otherwise clarifying the commissioner’s role as groupwide supervisor, including provisions for resolving disputes with other regulatory officials. These agreements or documentation shall not serve as evidence in any proceeding that any insurer or person within an insurance holding company system not domiciled or incorporated in this state is doing business in this state or is otherwise subject to jurisdiction in this state. (6) Other groupwide supervision activities, consistent with the authorities and purposes enumerated above, as considered necessary by the commissioner. (f) If the commissioner acknowledges that another regulatory official from a jurisdiction that is not accredited by the NAIC is the groupwide supervisor, the commissioner is authorized to reasonably cooperate, through supervisory colleges or otherwise, with groupwide supervision undertaken by the groupwide supervisor if the following conditions are satisfied: (1) The commissioner’s cooperation is in compliance with the laws of this state. (2) The regulatory official acknowledged as the groupwide supervisor also recognizes and cooperates with the commissioner’s activities as a groupwide supervisor for other internationally active insurance groups when applicable. When that recognition and cooperation is not reasonably reciprocal, the commissioner is authorized to refuse recognition and cooperation. (g) The commissioner is authorized to enter into agreements with, or obtain documentation from, any insurer registered pursuant to Section 1215.4, any affiliate of the insurer, and other state, federal, or international regulatory agencies for members of the internationally active insurance groups, that provide the basis for, or otherwise clarify, a regulatory official’s role as groupwide supervisor. (h) A registered insurer subject to this section shall be liable for and shall pay the reasonable expenses of the commissioner’s participation in the administration of this section, including the engagement of attorneys, actuaries, and any other professionals and all reasonable travel expenses. (Added by Stats. 2015, Ch. 213, Sec. 7. (AB 553) Effective August 17, 2015.)
  22. 1215.8.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    The commissioner must keep specified insurance holding company information confidential, and covered persons generally may not make it public or use it in public statements.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.8. (a) All information, documents, and copies thereof obtained by or disclosed to the commissioner or any other person in the course of an examination or investigation made pursuant to Section 1215.4, 1215.5, 1215.6, 1215.7, or 1215.75, and all information reported or provided pursuant to Section 1215.4, 1215.5, 1215.6, 1215.7, or 1215.75 are recognized as being proprietary and containing trade secrets, shall be kept confidential, are not subject to disclosure by the commissioner pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), are not subject to subpoena, and are not subject to discovery from the commissioner or admissible into evidence in a private civil action if obtained from the commissioner. This information shall not be made public by the commissioner or any other person, except to insurance departments of other states, without the prior written consent of the insurance company to which it pertains, unless the commissioner, after giving the insurer and its affiliates who would be affected thereby notice and opportunity to be heard, determines that the interests of policyholders, shareholders, or the public will be served by the publication of the information, in which event the commissioner may publish all or any part of the information in a manner as the commissioner may deem appropriate. (1) For purposes of the information reported and provided to the department pursuant to subdivisions (n) and (o) of Section 1215.4, the commissioner shall maintain the confidentiality of the group capital calculation, the group capital ratio produced within the calculation, and any group capital information received from an insurance holding company system supervised by the Federal Reserve Board or a United States groupwide supervisor. (2) For purposes of the information reported and provided to the department pursuant to subdivision (p) of Section 1215.4, the commissioner shall maintain the confidentiality of the liquidity stress test results, supporting disclosures, and any liquidity stress test information received from an insurance holding company system supervised by the Federal Reserve Board and non-United States groupwide supervisors. (b) In order to assist in the performance of the commissioner’s duties, the commissioner: (1) May, upon request, be required to share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to subdivision (a), including proprietary and trade secret documents and materials, with other state, federal, and international regulatory agencies, with the NAIC, with a third-party consultant designated by the commissioner, and with state, federal, and international law enforcement authorities, including members of any supervisory college described in Section 1215.7, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the documents, materials, or other information, and has verified in writing the legal authority to maintain confidentiality. (2) Notwithstanding paragraph (1), may only share confidential and privileged documents, materials, or information reported pursuant to subdivision (m) of Section 1215.4 with commissioners of states having statutes or regulations substantially similar to subdivision (a) and who have agreed in writing not to disclose the information. (3) May receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, including proprietary and trade secret information, from the NAIC and its affiliates and subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any documents, materials, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the documents, materials, or information. (4) May enter into written agreements with the NAIC and a third-party consultant designated by the commissioner governing sharing and use of information provided pursuant to this subdivision consistent with this subdivision that shall do the following: (A) Specify procedures and protocols regarding the confidentiality and security of information shared with the NAIC or a third-party consultant designated by the commissioner pursuant to this subdivision, including procedures and protocols for sharing by the NAIC with other state, federal, or international regulators. The agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the documents, materials, or other information and has verified in writing the legal authority to maintain its confidentiality. (B) Specify that ownership of information shared with the NAIC or a third-party consultant designated by the commissioner pursuant to this subdivision remains with the commissioner and the NAIC’s or third-party consultant’s use of the information is subject to the direction of the commissioner. (C) Prohibit the NAIC or a third-party consultant designated by the commissioner from storing the information shared pursuant to this article in a permanent database after the underlying analysis is completed, except for the documents, materials, or information reported pursuant to subdivision (p) of Section 1215.4. (D) Require prompt notice to be given to an insurer whose confidential information in the possession of the NAIC or a third-party consultant designated by the commissioner pursuant to this subdivision is subject to a request or subpoena to the NAIC or a third-party consultant designated by the commissioner for disclosure or production. (E) Require the NAIC or a third-party consultant designated by the commissioner to consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant designated by the commissioner may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant designated by the commissioner pursuant to this subdivision. (F) For an agreement with a third-party consultant designated by the commissioner, provide for notification of the identity of the consultant to applicable insurers reporting or submitting documents, materials, or information pursuant to subdivision (p) of Section 1215.4. (c) The sharing of information by the commissioner pursuant to subdivision (b) shall not constitute a delegation of regulatory authority or rulemaking, and the commissioner is solely responsible for the administration, execution, and enforcement of the provisions of this article. (d) A waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall not occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subdivision (b). (e) Documents, materials, or other information filed in the possession or control of the NAIC or a third-party consultant designated by the commissioner pursuant to this subdivision shall be confidential by law and privileged, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. (f) (1) The group capital calculation and resulting group capital ratio required pursuant to subdivision (n) of Section 1215.4 and the liquidity stress test, along with its results and supporting disclosures, required pursuant to subdivision (p) of Section 1215.4 are regulatory tools for assessing group risks and capital adequacy and group liquidity risks, respectively, and are not intended as a means to rank insurers or insurance holding company systems generally. (2) Except as otherwise required by this article, an insurer, broker, or other person engaged in the insurance business shall not make, publish, disseminate, circulate, or place before the public, or directly or indirectly cause to be made, published, disseminated, circulated, or placed before the public in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, over a radio or television station or any electronic means of communication available to the public, or in any other way as an advertisement, announcement, or statement containing a representation or statement with regard to the group capital calculation, group capital ratio, liquidity stress test results, supporting disclosures for the liquidity stress test of an insurer or an insurer group, or of any component derived in the calculation. (3) If a materially false statement regarding an insurer’s or insurer group’s group capital calculation, resulting group capital ratio, liquidity stress test result, or supporting disclosures for the liquidity stress test, or an inappropriate comparison of any amount to an insurer’s or insurance group’s group capital calculation, resulting group capital ratio, liquidity stress test result, or liquidity stress test supporting disclosures, is published in a written publication and the insurer is able to demonstrate to the commissioner with substantial proof the falsity or inappropriateness of the statement, then the insurer, notwithstanding paragraph (2), may publish announcements in a written publication if the sole purpose of the announcement is to rebut the materially false statement. (Amended by Stats. 2022, Ch. 28, Sec. 117. (SB 1380) Effective January 1, 2023.)
  23. 1215.9.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. )

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    The commissioner may issue rules, regulations, and orders needed to carry out this article, after notice and an opportunity to be heard.

    ## 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 4.7. Insurance Holding Company System Regulatory Act [1215 - 1215.18] ( Article 4.7 added by Stats. 1969, Ch. 1275. ) ## 1215.9. The commissioner may, upon notice and opportunity for all interested persons to be heard, issue such rules, regulations, and orders as shall be necessary to carry out the provisions of this article. (Added by renumbering Section 1215.8 by Stats. 2012, Ch. 282, Sec. 9. (SB 1448) Effective January 1, 2013.)
  24. 12150.

    ## 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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    Motor clubs advertising a referred auto-buying service must disclose that the dealer paid a fee and include a required notice; printed ads must use at least 10-point bold type.

    ## 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. ) ## 12150. (a) Buying and selling service is an arrangement by a motor club whereby the holder of a service contract with a motor club is aided in any way in the purchase or sale of an automobile. (b) (1) If a motor club offers a service that refers members to a new motor vehicle dealer for the purchase of a new motor vehicle, and the dealer pays the motor club any compensation, including, but not limited to, an advertising, promotional, or marketing fee, any advertisement of that service shall clearly and conspicuously disclose that the dealer has paid the fee and shall have the following statement: “All new cars arranged for sale are subject to availability and a price prearranged with the selling franchised new car dealer.” (2) In a printed advertisement, the disclosures required by paragraph (1) shall be in not less than 10-point bold type and shall be textually segregated from the other portions of the advertisement. (3) The disclosures required by paragraph (1) do not apply to general advertisements of a motor club that merely list an auto buying service as one of several services offered by the motor club and that do not provide any details of the auto buying service. (Amended by Stats. 1994, Ch. 1253, Sec. 2. Effective January 1, 1995.)
  25. 12151.

    ## 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 “theft service” as an act by a motor club to locate, identify, or recover a stolen or missing motor vehicle, or to detect or apprehend the thief.

    ## 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. ) ## 12151. Theft service is an act by a motor club for the purpose of locating, identifying or recovering a stolen or missing motor vehicle owned or controlled by the holder of a service contract with any such club or for the purpose of detecting or apprehending the person guilty of the theft. (Enacted by Stats. 1935, Ch. 145.)
  26. 12152.

    ## 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 map service as a motor club giving road maps to service contract holders at no cost.

    ## 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. ) ## 12152. Map service is the furnishing by a motor club of road maps without cost to holders of service contracts with any such club. (Enacted by Stats. 1935, Ch. 145.)
  27. 12153.

    ## 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 “travel service” for a motor club as furnishing touring and travel aids and assistance.

    ## 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. ) ## 12153. Travel service is the furnishing by a motor club of touring and travel aids and assistance, and may include any or all of the following: (a) Road maps, touring guides, directories of accommodations for travelers, club periodicals, travel information, magazines, and brochures. (b) Procuring travel tickets of all kinds and reservations for accommodations in connections therewith. (Repealed and added by Stats. 1969, Ch. 858.)
  28. 12154.

    ## 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’s claim adjustment service is adjusting claims for a service contract holder when the claim involves injury or property damage from a motor-vehicle accident.

    ## 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. ) ## 12154. Claim adjustment service is an act by a motor club for the purpose of adjusting claims on behalf of the holder of a service contract with any such club, when such claim results from injury or damage to person or property arising out of an accident, in connection with the ownership, maintenance, operation and use of a motor vehicle. (Enacted by Stats. 1935, Ch. 145.)
  29. 12155.

    ## 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 “license service” as assistance a motor club gives a person to get vehicle registration, a driver’s license, or a transfer of ownership records.

    ## 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. ) ## 12155. License service is the rendering of assistance by a motor club to any person in obtaining: (a) Registration of a motor vehicle with the State. (b) A driver’s license. (c) A transfer of legal or registered ownership upon the records of the Department of Motor Vehicles. (Amended by Stats. 1963, Ch. 209.)
  30. 12156.

    ## 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 “insurance service” for motor clubs and related service contracts or memberships.

    ## 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. ) ## 12156. Insurance service is the selling or giving, with a service contract or as a result of membership in or affiliation with a motor club, of a policy of insurance covering liability or loss by the holder resulting from injury or damage to person or property arising out of an accident, such liability or loss being the consequence of the ownership, maintenance, operation, or use of a motor vehicle. Insurance service also includes the selling or giving with a service contract or as a result of membership in or affiliation with a motor club, of a policy of insurance, or a certificate under a master policy in which the club is the master policyholder, covering the club member, or any member of his family, for loss, other than loss of time, from accidental injury from any cause or accidental death from any cause. For such purpose any certificated motor club is deemed to be an “association” within the meaning of Section 10270.5 and the club members and members of their families are deemed to be members of such association. (Repealed and added by Stats. 1969, Ch. 858.)
  31. 12157.

    ## 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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    An act by a motor club counts as the service defined in this chapter if it is done to render that service, even if the service is not completed.

    ## 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. ) ## 12157. Any act by a motor club for the purpose of rendering a service defined in this chapter constitutes such service, whether or not the service as defined is completed. (Enacted by Stats. 1935, Ch. 145.)
  32. 12158.

    ## 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 service contract is a written agreement in which a person promises, for consideration, to provide or arrange motor club service for another person.

    ## 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. ) ## 12158. A service contract is a written agreement whereby any person promises for a consideration to render, furnish or procure motor club service for any other person. (Enacted by Stats. 1935, Ch. 145.)
  33. 12159.

    ## 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 “miscellaneous service” for 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. ) ## 12159. Miscellaneous service means any other service which may be furnished and which augments or is incidental to any service performed by the club as authorized under the provisions of this chapter or any other service which is of assistance and is beneficial to its members and is feasible for the club to render. (Added by Stats. 1969, Ch. 858.)
  34. 1216.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. )

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    This article may be cited as the Business Transacted with Producer Controlled Insurer Act.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. ) ## 1216. This article may be cited as the Business Transacted with Producer Controlled Insurer Act. (Added by Stats. 1992, Ch. 614, Sec. 7. Effective January 1, 1993.)
  35. 1216.1.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. )

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    This section defines key insurance terms used in the article.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. ) ## 1216.1. As used in this article, the following terms have the following meanings: (a) “Accredited state” means a state in which the insurance department or regulatory agency having jurisdiction over the business of insurance has qualified as meeting the minimum financial regulatory standards promulgated and established from time to time by the National Association of Insurance Commissioners’ (NAIC) Financial Regulation Standards and Accreditation Program. (b) “Control” or “controlled” has the meaning ascribed in Section 1215. (c) “Controlled insurer” means an admitted insurer which is controlled, directly or indirectly, by a producer. (d) “Controlling producer” means a producer who, directly or indirectly, controls an insurer. (e) “Admitted insurer” or “insurer” means any person, firm, association, or corporation admitted to transact any property or casualty insurance business in this state. The following are not insurers for the purposes of this article: (1) All residual market pools and joint underwriting authorities or associations. (2) All captive insurers, other than risk retention groups as defined in the federal Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. Sec. 9671), the federal Liability Risk Retention Act of 1986 (15 U.S.C. Sec. 3901 et seq.), and the California Risk Retention Act of 1991 (Chapter 1.5 (commencing with Section 125) of Part 1). For the purposes of this article, captive insurers are either insurance companies which are owned by another organization and whose exclusive purpose is to insure risks of the parent organization and affiliated companies, or in the case of groups and associations, insurance organizations which are owned by the insureds and whose exclusive purpose is to insure risks of member organizations and group or association members and their affiliates. (f) “Producer” means a fire and casualty licensee or licensees or any other person, firm, association, or corporation, when, for any compensation, commission, or other thing of value, the person, firm, association, or corporation acts or aids in any manner in soliciting, negotiating, or procuring the making of any insurance contract on behalf of an insured other than the person, firm, association, or corporation. (Amended by Stats. 2014, Ch. 71, Sec. 99. (SB 1304) Effective January 1, 2015.)
  36. 1216.2.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. )

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    This section says which insurers are covered by the article and keeps Article 4.7 applying where this article does not give the commissioner more authority or impose stricter requirements.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. ) ## 1216.2. This article shall apply to insurers as defined in subdivision (e) of Section 1216.1, either domiciled in this state or domiciled in a state that is not an accredited state which has in effect a substantially similar law. All provisions of Article 4.7 (commencing with Section 1215) of Chapter 2 of Part 2 of Division 1, to the extent that this article does not confer greater authority upon the commissioner or impose more restrictive requirements upon any person, shall continue to apply to all parties within insurance holding company systems which are subject both to Article 4.7 and to this article. (Added by Stats. 1992, Ch. 614, Sec. 7. Effective January 1, 1993.)
  37. 1216.3.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. )

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    This section applies to certain controlled insurers and controlling producers, and it requires a written, board-approved contract with specific terms, reporting, reserve review, and limits on business and reinsurance.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. ) ## 1216.3. (a) (1) The provisions of this section shall apply if, in any calendar year, the aggregate amount of gross written premium of business placed with a controlled insurer by a controlling producer is equal to or greater than 5 percent of the admitted assets of the controlled insurer, as reported in the controlled insurers’ quarterly statement filed as of September 30 of the prior year. (2) Notwithstanding paragraph (1) of subdivision (a), the provisions of this section shall not apply if: (A) The controlling producer both (i) places insurance only with the controlled insurer, or only with the controlled insurer and a member or members of the controlled insurer’s holding company system, or the controlled insurer’s parent, affiliate, or subsidiary and receives no compensation based upon the amount of premiums written in connection with that insurance; and (ii) accepts insurance placements only from nonaffiliated subproducers, and not directly from insureds. (B) The controlled insurer, except for insurance business written through a residual market facility such as the California Automobile Assigned Risk Plan, accepts insurance business only from a controlling producer, a producer controlled by the controlled insurer, or a producer that is a subsidiary of the controlled insurer. (b) A controlled insurer shall not accept business from a controlling producer and a controlling producer shall not place business with a controlled insurer unless there is a written contract between the controlling producer and the insurer specifying the responsibilities of each party, and the contract has been approved by the board of directors of the insurer and contains the following minimum provisions: (1) The controlled insurer may terminate the contract for cause upon written notice to the controlling producer. The controlled insurer shall suspend the authority of the controlling producer to write business during the pendency of any dispute regarding the cause for the termination. (2) The controlling producer shall render accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to, the controlling producer. (3) The controlling producer shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date shall be fixed so that premiums or installments of premiums collected shall be remitted no later than 90 days after the effective date of any policy placed with the controlled insurer under this contract. (4) All funds collected for the controlled insurer’s account shall be held by the controlling producer in a fiduciary capacity, in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System, in accordance with the provisions of the insurance law as applicable. However, funds of a controlling producer not required to be licensed in this state shall be maintained in compliance with the requirements of the controlling producer’s domiciliary jurisdiction. (5) The controlling producer shall maintain separately identifiable records of business written for the controlled insurer. (6) The contract shall not be assigned in whole or in part by the controlling producer. (7) The controlled insurer shall provide the controlling producer with its underwriting standards, rules and procedures, manuals setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling producer shall adhere to the standards, rules, procedures, rates, and conditions. The standards, rules, procedures, rates, and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by a producer other than the controlling producer. (8) The rates and terms of the controlling producer’s commissions, charges or other fees, and the purposes for those charges or fees. The rates of the commissions, charges, and other fees shall be no greater than those applicable to comparable business placed with the controlled insurer by producers other than controlling producers. For purposes of this paragraph and paragraph (7), examples of “comparable business” includes the same lines of insurance, same kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business. (9) If the contract provides that the controlling producer, on insurance business placed with the insurer, is to be compensated contingent upon the insurer’s profits on that business, then this compensation shall not be determined and paid until at least five years after the premiums on liability insurance are earned and at least one year after the premiums are earned on any other insurance. In no event shall the commissions be paid until the adequacy of the controlled insurer’s reserves on remaining claims has been independently verified pursuant to paragraph (1) of subdivision (d). (10) A limit on the controlling producer’s writings in relation to the controlled insurer’s surplus and total writings. The insurer may establish a different limit for each line or subline of business. The controlled insurer shall notify the controlling producer when the applicable limit is approached and shall not accept business from the controlling producer if the limit is reached. The controlling producer shall not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached. (11) The controlling producer may negotiate but shall not bind reinsurance on behalf of the controlled insurer on business the controlling producer places with the controlled insurer, except that the controlling producer may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the controlled insurer contains underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which those automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules. (c) Every controlled insurer shall have an audit committee of the board of directors composed of independent directors. The audit committee shall annually meet with management, the insurer’s independent certified public accountants, and an independent casualty actuary, or other independent loss reserve specialist acceptable to the commissioner, to review the adequacy of the insurer’s loss reserves. (d) (1) In addition to any other required loss reserve certification, the controlled insurer shall annually, on April 1 of each year, file with the commissioner an opinion of an independent casualty actuary, or other independent loss reserve specialist, acceptable to the commissioner, reporting loss ratios for each line of business written and attesting to the adequacy of loss reserves established for losses incurred and outstanding as of yearend, including incurred but not reported losses, on business placed by the producer. (2) The controlled insurer shall annually report to the commissioner the amount of commissions paid to the producer, the percentage the amount represents of the net premiums written and comparable amounts and percentages paid to noncontrolling producers for placements of the same kinds of insurance. (Added by Stats. 1992, Ch. 614, Sec. 7. Effective January 1, 1993.)
  38. 1216.4.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. )

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    A controlling producer must give the prospective insured written notice of the producer-controlled insurer relationship before the policy takes effect, unless the business is placed through a non-controlling subproducer and the producer instead keeps a signed commitment from that subproducer.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. ) ## 1216.4. The controlling producer shall, prior to the effective date of the policy, deliver written notice to the prospective insured disclosing the relationship between the producer and the controlled insurer; except that, if the business is placed through a subproducer who is not a controlling producer, the controlling producer shall retain in its records a signed commitment from the subproducer that the subproducer is aware of the relationship between the insurer and the producer and that the subproducer has or will notify the insured of the relationship between the controlling producer and the controlled insurer. (Added by Stats. 1992, Ch. 614, Sec. 7. Effective January 1, 1993.)
  39. 1216.5.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. )

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    The commissioner may order a controlling producer to stop placing business with a controlled insurer, and may seek civil remedies for material noncompliance; a receiver may also sue after liquidation or rehabilitation.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. ) ## 1216.5. (a) (1) If the commissioner believes that the controlling producer or any other person has not materially complied with this article, or any regulation or order issued or promulgated pursuant to this article, and after notice and an opportunity to be heard, the commissioner may order the controlling producer to cease placing business with the controlled insurer. (2) If the commissioner finds that because of any material noncompliance that the controlled insurer or any policyholder thereof has suffered any loss or damage, the commissioner may bring a civil action or intervene in an action brought by or on behalf of the insurer or policyholder for recovery of compensatory damages for the benefit of the insurer or policyholder or other appropriate relief. (3) Nothing in paragraph (1) shall be construed to limit any authority granted to the commissioner by any other provision of law to issue orders or take actions prior to the holding of a hearing. (b) If an order for liquidation or rehabilitation of the controlled insurer has been entered pursuant to Article 14 (commencing with Section 1010) of Chapter 1 of Part 2 of Division 1, and the receiver appointed under that order believes that the controlling producer or any other person has not materially complied with this article, or any regulation or order issued or promulgated pursuant to this article, and the insurer suffered any loss or damage therefrom, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer. (c) Nothing contained in this section shall affect the right of the commissioner to impose any other penalties authorized by any other provision of law. (d) Nothing contained in this section is intended to or shall in any manner limit or diminish the rights of policyholders, claimants, creditors, or other third parties. (Added by Stats. 1992, Ch. 614, Sec. 7. Effective January 1, 1993.)
  40. 1216.6.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. )

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    Controlled insurers and controlling producers that were not already compliant with Section 1216.3 had 60 days to comply, and must comply with Section 1216.4 for policies written or renewed on or after March 1, 1993.

    ## 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 4.8. Business Transacted with Producer Controlled Insurer [1216 - 1216.6] ( Article 4.8 added by Stats. 1992, Ch. 614, Sec. 7. ) ## 1216.6. Controlled insurers and controlling producers who are not in compliance with Section 1216.3 of this act on its effective date shall have 60 days to do so and shall comply with Section 1216.4 beginning with all policies written or renewed on or after March 1, 1993. (Added by Stats. 1992, Ch. 614, Sec. 7. Effective January 1, 1993.)
  41. 12160.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    A person may not provide or agree to provide motor club service in this state unless first obtaining a certificate of authority from the commissioner.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12160. (a) A person shall not render or agree to render motor club service in this state without first obtaining from the commissioner a certificate of authority to act as a motor club. (b) The issuance, sale, or offer for sale in this state of securities of its own issue by any motor club shall be subject to the provisions of Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1 of this code the same as if motor clubs were included in Section 826 thereof, and any such club shall not be subject to the Corporate Securities Law in the Corporations Code. (Added by Stats. 1969, Ch. 858.)
  42. 12161.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    An applicant for a certificate of authority must use the commissioner’s form and pay a $4,939 filing fee. The certificate cannot be granted until the applicant meets the required legal conditions, and the holder must keep complying after issuance.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12161. Application for a certificate of authority shall be made on a form prescribed by the commissioner, accompanied by a filing fee of four thousand nine hundred thirty-nine dollars ($4,939). That certificate shall not be granted until the applicant conforms to the requirements of this part and the laws of this state prerequisite to its issue. After the issuance, the holder shall continue to comply with the requirements of this part and the laws of this state. (Amended by Stats. 2017, Ch. 534, Sec. 74. (AB 1699) Effective January 1, 2018.)
  43. 12162.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    A motor club cannot get a certificate of authority until it files required documents, posts required security, pays the annual fee, has its name approved, proves it is not disqualified, and satisfies the commissioner on the listed qualification subjects.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12162. The commissioner shall not issue a certificate of authority to any motor club until: (a) It files with him or her the following: (1) A formal application for the certificate in that form and detail as the commissioner requires, executed under oath by its president or other principal officer. (2) A certified copy of its charter or articles of incorporation and its bylaws, if any. (3) A copy of its latest financial statement, or report of independent audit as the commissioner may require; or, in the event neither is available, its most recent operating statement and balance sheet. Any financial statement, audit, operating and balance sheet shall be verified by the person compiling or making the same and by an executive officer of the applicant. (4) If it is a foreign corporation, a certificate from its domiciliary state regulatory authority executed not more than 30 days before the filing of its application that it is duly authorized to do a motor club business in that state. (5) An explanation of its plan of doing business, and copies of the following: its application for membership; the proposed membership certificate or identification card; any proposed addendum thereto; any individual insurance policy and any group master policy and individual certificates thereunder to be offered; any service contract to be issued. (6) Other information as the commissioner may find necessary in order to determine the applicant’s qualifications. (b) It first deposits security with the commissioner in one of the following forms: (1) Securities of the kinds prescribed by this code for capital fund investments by stock insurers and approved by the commissioner, in the amount of one hundred thousand dollars ($100,000) based on par value or market value, whichever is less. The making, maintenance and withdrawal of those deposits and the substitution of securities therein shall be governed by Article 11 (commencing with Section 939) of Chapter 1 of Part 2 of Division 1. (2) A surety bond on a form prescribed by the Attorney General of this state, executed by an admitted surety insurer in the penal sum of one hundred thousand dollars ($100,000). (c) It pays to the commissioner an annual license fee of four hundred twenty-four dollars ($424). (d) Its name is approved by the commissioner under Section 881, which applies to motor clubs. (e) It proves by affidavits of its officers, directors, managers, and individual owners of more than 10 percent on a form prescribed by the commissioner that it is not disqualified under Section 704.5. (f) It satisfies the commissioner it is qualified as respects each of the subjects enumerated in subdivisions (b), (c), (e), (f), (h), (i), and (j) of Section 717, when those subjects are read in the sense of protection to its members instead of policyholders. (g) It is a separate legal entity capable of being examined by the commissioner as provided in this part. (Amended by Stats. 2017, Ch. 534, Sec. 75. (AB 1699) Effective January 1, 2018.)
  44. 12162.5.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    Motor clubs applying for a certificate of authority must show the commissioner they have at least $250,000 in net worth, and they must keep that net worth to keep the certificate.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12162.5. All motor clubs applying for a certificate of authority to act as a motor club in this state shall demonstrate to the satisfaction of the commissioner that such club has a net worth of not less than two hundred fifty thousand dollars ($250,000). For the purposes of Sections 12162.5 and 12162.6, net worth is defined as the excess of total assets over total liabilities. Such net worth shall be maintained at all times as a condition for the continuance of its certificate of authority to act as a motor club in this state. (Amended by Stats. 1992, Ch. 15, Sec. 1. Effective January 1, 1993.)
  45. 12162.6.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    Some older motor clubs may keep their certificate until July 1, 1996 without meeting the increased net worth requirement. A motor club is treated as insolvent if its net worth falls below $250,000 and it does not satisfy one of two listed conditions.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12162.6. (a) A motor club holding a certificate of authority to act as a motor club granted prior to January 1, 1992, may continue to retain the certificate until July 1, 1996, without complying with the increased minimum net worth requirement of Section 12162.5. (b) A motor club shall be deemed to be insolvent and subject to Section 12164 proceedings whenever its net worth is less than two hundred fifty thousand dollars ($250,000) and it fails to comply with one of these two conditions: (1) An audit by an independent certified public accountant with an audit report prepared by the certified public accountant and filed with the commissioner no later than June 30 of the year following the year covered by the audit. (2) A demonstration to the satisfaction of the commissioner, on a quarterly basis, of an amount of liquid assets sufficient to satisfy its current liabilities to members. (Amended by Stats. 1992, Ch. 15, Sec. 2. Effective January 1, 1993.)
  46. 12162.7.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    This section defines “liquid assets” for this article.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12162.7. For purposes of this article, “liquid assets” means cash, cash equivalents, and marketable securities readily convertible into cash. Liquid assets also include bonds, stocks, certificates of deposit, negotiable short-term instruments, service members’ dues receivable not over 90 days, receivables due from affiliates not over 90 days, acquisition costs deferred not over 90 days, federal income tax recoverables, and interest and dividends due and accrued. (Added by Stats. 1992, Ch. 15, Sec. 3. Effective January 1, 1993.)
  47. 12162.8.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    A motor club is treated as materially deficient if its audit report has a qualified opinion about financial condition or going-concern status, or if it cannot show the commissioner enough liquid assets to cover current liabilities to members.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12162.8. If any portion of the audit report required by paragraph (1) of subdivision (b) of Section 12162.6 includes a qualified opinion as to the financial condition of the motor club or its ability to exist as a going concern, the motor club shall be considered materially deficient under Section 717, and subject to Section 12164. Similarly, if a motor club qualifying under paragraph (2) of subdivision (b) of Section 12162.6 fails to demonstrate to the commissioner an amount of liquid assets sufficient to satisfy its current liabilities to members, it shall be considered materially deficient under Section 717 and subject to Section 12164. (Added by Stats. 1992, Ch. 15, Sec. 4. Effective January 1, 1993.)
  48. 12163.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    A motor club must keep the required security in place; if it does not, its certificate of authority can be revoked.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12163. (a) The security required by subdivision (b) of Section 12162 shall thereafter be continuously maintained by a motor club in one of the forms prescribed. Failure of a motor club so to maintain the same shall be cause for revoking its certificate of authority. (b) Such security shall be for the protection, use, and benefit of all persons whose applications for membership in a motor club have been accepted by such club or its representative and of this state as respects fees, fines, penalties, and taxes. Such security shall be subject to the following conditions, and, if a bond, shall be expressly so conditioned: 1. The club shall faithfully furnish and render to all persons whose applications for membership have been accepted any and all of the motor club benefits and services sold or offered for sale by it. 2. The club will faithfully conform to all provisions of law of the state pertaining to the sale and rendering of “motor club service” as defined and provided in Part 5 (commencing with Section 12140) of Division 2 of this code. 3. The club will promptly pay all fees, fines, penalties, and taxes which may be levied against it under authority of law. 4. If the club ceases to do business in this state as a motor club, it shall comply with the appropriate withdrawal procedure. (c) Any person defrauded or injured by any wrongful act, misrepresentation, or failure on the part of the club with respect to the selling or rendering of any of its benefits or services may bring suit on the bond, if the security be a bond, in his own name. The commissioner may bring suit on such bond. If the security be a deposit of securities, any such a person or the commissioner may levy upon the same in execution of a judgment. (Added by Stats. 1969, Ch. 858.)
  49. 12164.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    The commissioner may suspend or revoke a motor club’s certificate of authority after a hearing if specified problems are found.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12164. (a) The commissioner may revoke or suspend the certificate of authority of a motor club whenever, after a hearing in accordance with the procedure provided in Section 701, he finds that any of the following circumstances exist: 1. The club has violated any provision of this part. 2. It or its officers refuse to submit to an examination, as provided for in Section 12169. 3. It is transacting business fraudulently. 4. It is no longer able to qualify for issuance to it of a certificate of authority as a motor club. (b) The commissioner may give notice of such revocation or suspension to the public in such manner as he deems proper. (c) All of the provisions of Article 14 (commencing with Section 1010) of Chapter 1 of Part 2 of Division 1 of this code not inconsistent with this part shall apply to motor clubs. For the purpose of this part, “insolvency” means that a club’s assets are less than its liabilities. (Added by Stats. 1969, Ch. 858.)
  50. 12165.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

    Verify source ↗

    Certificates of authority under this part last indefinitely, but end if revoked by the commissioner or if specified events occur.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12165. Subject to the annual fee provisions herein, every certificate of authority issued or held under this part shall be for an indefinite term and, unless sooner revoked by the commissioner, shall terminate upon occurrence of any of the following: (a) Upon the holder’s ceasing to exist as a separate entity. (b) Upon the winding up, or dissolution, or expiration, or forfeiture of the holder’s corporate existence. (c) Upon completion of the withdrawal procedure prescribed by Article 15 (commencing with Section 1070) of Chapter 1 of Part 2 of Division 1 of this code and surrender by the holder of its certificate of authority and cancellation of the same by the commissioner. All provisions of such article not inconsistent with this part shall apply. (d) Upon the entry of a final court order in a proceeding under said Article 14 (commencing with Section 1010), Chapter 1 of Part 2 of Division 1 of this code. (Added by Stats. 1969, Ch. 858.)
  51. 12166.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    Each holder of a certificate of authority under this chapter must pay the commissioner an annual fee of $205 in advance.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12166. Notwithstanding the preceding provisions for a certificate of authority of indefinite term, each holder of a certificate of authority under this chapter shall owe and pay in advance to the commissioner an annual fee of two hundred five dollars ($205) on account of that certificate of authority until its final termination or revocation. That fee shall be for annual periods commencing on July 1 of each year and ending on June 30 of each year and shall be due on each March 1 and shall be delinquent on and after each April 1. (Amended by Stats. 2017, Ch. 534, Sec. 76. (AB 1699) Effective January 1, 2018.)
  52. 12167.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    A motor club seeking a certificate of authority does not need prior qualification with the Secretary of State for intrastate business, but a foreign applicant still must qualify before doing intrastate business in the state.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12167. Qualification of a motor club for a certificate of authority under this part does not require prior qualification with the Secretary of State under the Corporations Code for an intrastate business, but the issuance to it of a certificate of authority under this part does not relieve such foreign applicant of any duty to qualify with the Secretary of State pursuant to the Corporations Code before transacting intrastate business in this state. (Added by Stats. 1969, Ch. 858.)
  53. 12168.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

    Verify source ↗

    Each year, amended filing documents must be filed with the commissioner by March 1, and the commissioner may require a $50 payment for each annual filing.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12168. Annually on or before March 1 of each year, copies of any instruments making any changes in articles of incorporation, bylaws, and membership certificate or identification card or service contract required by this part to be filed with the application for admission shall be filed with the commissioner. In the case of articles of incorporation, an amendment or certificate of amendment shall be certified by the official custodian of the original as a true copy of the same on file in his or her office. Amended bylaws or other papers shall be certified by the corporation secretary over the corporate seal to be true copies of the same currently adopted. The commissioner shall require the payment of fifty dollars ($50) for each annual filing of amended documents or papers pursuant to this article. (Amended by Stats. 2017, Ch. 534, Sec. 77. (AB 1699) Effective January 1, 2018.)
  54. 12169.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

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    The commissioner may demand sworn financial statements and inspect a motor club’s records when there is reason to suspect insolvency or fraud, and certain exam costs must be paid by the club if deadlines are missed or false statements are found.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12169. (a) Whenever the commissioner has reasonable cause to believe that a motor club is insolvent or is transacting its business in a fraudulent manner, he may demand from the club a statement under oath setting forth its assets and liabilities. He may, for the purpose of verifying the correctness of such statement, examine the books and affairs of the club. (b) If such statement is not furnished within 20 days from the time of such demand by the commissioner, or if, upon the examination of such records, the statement furnished or any record examined is found to contain any willful misstatement of fact, the expense of the examination shall be paid by the motor club. (c) Whenever any foreign motor club applies for admission, the commissioner may make, or cause to be made by the motor club regulatory authority of its domiciliary state, an examination of the applicant’s motor club business and affairs. Whenever such an examination is made, all of the provisions of Article 4 (commencing with Section 730) Chapter 1 of Part 2 of Division 1 of this code not inconsistent with this part shall be applicable. (Added by Stats. 1969, Ch. 858.)
  55. 12170.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. )

    Verify source ↗

    Motor clubs certificated on the chapter’s effective date do not have to be recertificated.

    ## 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 2. Certificate of Authority [12160 - 12170] ( Chapter 2 repealed and added by Stats. 1969, Ch. 858. ) ## 12170. Motor clubs certificated on the effective date of this chapter shall not be required to be recertificated, but thereafter shall be subject to the provisions of this chapter and shall be issued continuous certificates of authority subject to the conditions provided in this chapter. (Added by Stats. 1969, Ch. 858.)
  56. 122.

    ## 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 ↗

    Certain admitted insurers may add the listed kinds of insurance to a policy if the policy includes qualifying fire coverage and is limited to noncommercial risks and specified residential or related property.

    ## 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. ) ## 122. (a) An insurer admitted for all the classes of insurance defined in Sections 102, 107, 108, 112, and 120 is authorized, in addition to the underwriting powers granted by such classes, to include any and all insurance described in paragraph (b) in a policy which contains fire coverage written on a form complying with either Section 2070 or 2071 and which provides insurance covering only noncommercial risks and covering either residence properties (not more extensive than a four-family dwelling) and appurtenances, or the contents thereof other than merchandise, or both. (b) Such insurance is any or all insurance against all risks of physical loss of, damage to, or personal liability (except workers’ compensation) for injury to person or damage to property incident to, any or all of the following: (1) The location described and property covered by the fire insurance policy as described in subdivision (a), (2) Personal effects, (3) Boats not over 16 feet in length (including furnishings, equipment, outboard motors, and trailers); provided the physical loss or damage coverage does not exceed five hundred dollars ($500), (4) Personal property intended primarily for residential or recreational use, (excluding boats except as provided above), (5) Farm implements or self-propelled vehicles, excluding automobiles and aircraft, and, (6) Horses, including accouterments and vehicles or implements to be drawn thereby. (Amended by Stats. 2018, Ch. 231, Sec. 4. (AB 2045) Effective January 1, 2019.)
  57. 1220.

    ## 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 5. Life Insurance Policies [1220 - 1221] ( Article 5 enacted by Stats. 1935, Ch. 145. )

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    Domestic incorporated life insurers may invest funds in loans on their own policies, so long as the loan amount does not exceed the policy reserve; those policy loans may not be deposited with the commissioner under the cited article.

    ## 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 5. Life Insurance Policies [1220 - 1221] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 1220. Domestic incorporated life insurers may also invest any funds in loans upon any of their own policies in an amount not exceeding the reserve against such policy at the time the loan is made, but policy loans shall not be deposited with the commissioner under Article 2, Chapter 5, Part 2, Division 2. (Enacted by Stats. 1935, Ch. 145.)
  58. 1221.

    ## 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 5. Life Insurance Policies [1220 - 1221] ( Article 5 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    An insurer’s loans on its own policies must be credited when calculating the deposit required by the referenced insurance provisions, and those loans must be deducted from the net value of registered policies.

    ## 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 5. Life Insurance Policies [1220 - 1221] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 1221. The amount thus loaned by an insurer upon its own policies shall be credited to the insurer in determining the amount of deposit required to comply with the provisions of Article 2, Chapter 5, Part 2, Division 2. Such loans shall be deducted from the net value of the registered policies. (Enacted by Stats. 1935, Ch. 145.)
  59. 12250.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. )

    Verify source ↗

    A service contract may not be executed, issued, or delivered in this state until the commissioner has approved its form in writing.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. ) ## 12250. A service contract shall not be executed, issued or delivered in this State until the form thereof is approved in writing by the commissioner. (Enacted by Stats. 1935, Ch. 145.)
  60. 12251.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. )

    Verify source ↗

    Service contracts covered by this section must be made in duplicate, dated, signed by the motor club, countersigned by the club’s authorized agent and the purchaser, and one copy must be kept by the club while the other is delivered to the purchaser.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. ) ## 12251. Every service contract executed, issued or delivered in this State shall be made in duplicate and shall be dated and signed by the motor club issuing it. Such contract shall be countersigned by a duly authorized agent of the club, and by the party purchasing the contract. One copy of the contract shall be kept by the club and the other copy shall be delivered to the purchasing party. (Enacted by Stats. 1935, Ch. 145.)
  61. 12252.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. )

    Verify source ↗

    A service contract cannot be issued in this state unless it includes required company details, cancellation terms, service details, territory, start date, and a statement that it is not insurance.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. ) ## 12252. A service contract shall not be executed, issued or delivered in this State unless it contains the following: (a) The exact corporate or other name of the club. (b) The exact location of its home office and of its usual place of business in this State, giving street number and city. (c) A provision that the contract may be canceled at any time by either the club or the holder, and that the holder will, if he has actually paid the consideration, thereupon be entitled to the unused portion of the consideration paid for such contract, calculated on a pro rata basis over the period of the contract, without any deductions. (d) A provision plainly specifying: (1) The services promised. (2) That the holder will not be required to pay any sum, in addition to the amount specified in the contract, for any services thus specified. (3) The territory wherein such services are to be rendered. (4) The date when such service will commence. (e) A statement in not less than fourteen point modern type at the head of said contract stating, “This is not an insurance contract.” (Enacted by Stats. 1935, Ch. 145.)
  62. 12253.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. )

    Verify source ↗

    A person must not solicit or help solicit another person to buy a service contract from a club without the required certificate of authority.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. ) ## 12253. A person shall not solicit or aid in the solicitation of another person to purchase a service contract issued by a club not having a certificate of authority procured pursuant to this part. (Enacted by Stats. 1935, Ch. 145.)
  63. 12254.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. )

    Verify source ↗

    A club, officer, or agent must not misrepresent the terms, benefits, or privileges of a service contract issued or to be issued by the 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. ) ## 12254. A club or an officer or agent thereof shall not in any manner misrepresent the terms, benefits or privileges of any service contract issued or to be issued by it. (Enacted by Stats. 1935, Ch. 145.)
  64. 12255.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. )

    Verify source ↗

    A service contract is still valid and binding on the club even if it was made, issued, or delivered contrary to this part.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. ) ## 12255. Any service contract made, issued or delivered contrary to any provision of this part shall nevertheless be valid and binding on the club. (Enacted by Stats. 1935, Ch. 145.)
  65. 12256.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. )

    Verify source ↗

    Motor clubs may choose not to issue service contracts, and clubs may distribute non-contract brochures or advertisements without prior commissioner approval.

    ## 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 3. The Service Contract [12250 - 12256] ( Heading of Chapter 3 renumbered from Chapter 4 by Stats. 1969, Ch. 858. ) ## 12256. Any motor club may elect not to execute, issue, or deliver service contracts in this state. A club may distribute brochures, prospectuses, or advertisements which are not contracts. Such materials may be issued or delivered without prior approval of the commissioner. If a club does not use service contracts it shall execute, issue, and deliver membership cards, tokens, or other indicia of membership to its members. (Added by Stats. 1969, Ch. 858.)
  66. 12280.

    ## 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 4. Agents [12280 - 12281] ( Heading of Chapter 4 renumbered from Chapter 5 by Stats. 1969, Ch. 858. )

    Verify source ↗

    A club agent in this state may not execute, issue, or deliver a service contract for a motor vehicle owner or operator unless the agent first gets a license from the commissioner.

    ## 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 4. Agents [12280 - 12281] ( Heading of Chapter 4 renumbered from Chapter 5 by Stats. 1969, Ch. 858. ) ## 12280. A club agent doing business in this State shall not execute, issue or deliver any service contract to any person owning or operating motor vehicles without first obtaining a license from the commissioner. (Enacted by Stats. 1935, Ch. 145.)
  67. 12280.2.

    ## 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 4. Agents [12280 - 12281] ( Heading of Chapter 4 renumbered from Chapter 5 by Stats. 1969, Ch. 858. )

    Verify source ↗

    The filing fee for a motor club agent license is $85, and the commissioner may prescribe the form of licenses and license applications.

    ## 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 4. Agents [12280 - 12281] ( Heading of Chapter 4 renumbered from Chapter 5 by Stats. 1969, Ch. 858. ) ## 12280.2. (a) The fee for filing application for license as motor club agent is eighty-five dollars ($85). (b) Property broker-agents, casualty broker-agents, personal lines broker-agents, and limited lines automobile insurance agents licensed under Chapter 5 (commencing with Section 1621) of Part 2 of Division 1 need not be licensed to act as motor club agents under this chapter. (c) This section shall not permit a motor club agent to have a certificate of convenience nor a nonresident license, but shall require only club appointments, and shall not require the keeping of records or fiduciary accounts. Appropriate licenses and license applications may be prescribed by the commissioner. (Amended by Stats. 2017, Ch. 534, Sec. 78. (AB 1699) Effective January 1, 2018.)
  68. 12281.

    ## 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 4. Agents [12280 - 12281] ( Heading of Chapter 4 renumbered from Chapter 5 by Stats. 1969, Ch. 858. )

    Verify source ↗

    A club agent may not collect or receive money or other value before a service contract is executed, issued, or delivered unless the agent has first obtained the required license.

    ## 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 4. Agents [12280 - 12281] ( Heading of Chapter 4 renumbered from Chapter 5 by Stats. 1969, Ch. 858. ) ## 12281. Without first obtaining such license, a club agent shall not collect or receive from any person, in advance of the execution, issuance or delivery of any such service contract, any money or other thing of value upon any promise or agreement to execute, issue or deliver any such service contract. (Enacted by Stats. 1935, Ch. 145.)
  69. 123.

    ## 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 ↗

    An admitted liability insurer may extend coverage for certain noncommercial or farm risks to include the insured’s legal liability for property damage caused by teams or vehicles, subject to Section 115’s meaning of those terms.

    ## 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. ) ## 123. An insurer admitted to transact liability insurance may extend such insurance on noncommercial or farm risks to include insurance of the legal liability of the insured for damage to property caused by use of “teams” or “vehicles” as the meaning thereof is limited by Section 115. (Added by Stats. 1961, Ch. 369.)
  70. 1230.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

    Verify source ↗

    This section states the purpose of the article: to set guidelines for life insurers using certain life insurance policies with adjustable policy loan interest rates.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1230. The Legislature declares that the purpose of this article is to establish guidelines for life insurers to use in life insurance policies which contain a provision for periodic adjustment of policy loan interest rates and are issued after the effective date of this article. It is the intent of the Legislature that the life insurance industry make available to the people of the State of California who purchase new life insurance policies after the effective date of this act the benefits of higher dividends or lower premiums, or both, resulting from the increased earnings through the use of higher policy loan interest rates. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  71. 1231.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

    Verify source ↗

    This section defines “published monthly average” for this article.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1231. For the purposes of this article the “published monthly average” means: (a) Moody’s Corporate Bond Yield Average-Monthly Average Corporates as published by Moody’s Investors Service, Inc. or any successor thereto. (b) In the event that Moody’s Corporate Bond Yield Average-Monthly Average Corporates is no longer published, a substantially similar average, established by the Legislature. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  72. 12311.

    ## 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 5. Penalties [12311- 12311.] ( Heading of Chapter 5 renumbered from Chapter 6 by Stats. 1969, Ch. 858. )

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    Anyone who violates any provision of this part commits a misdemeanor.

    ## 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 5. Penalties [12311- 12311.] ( Heading of Chapter 5 renumbered from Chapter 6 by Stats. 1969, Ch. 858. ) ## 12311. Any person violating any provisions of this part is guilty of a misdemeanor. (Amended by Stats. 1971, Ch. 163.)
  73. 1232.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

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    Life insurers must set policy loan interest rates using one of the stated methods, cap certain loan interest charges, and keep a written pricing or dividend policy for adjustable-rate policies.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1232. (a) Policies issued on or after the effective date of this article shall provide for policy loan interest rates at either of the following rates: (1) A provision permitting a maximum interest rate of not more than 8 percent per annum. (2) A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law. (b) The rate of interest charged on a policy loan made under paragraph (2) of subdivision (a) shall not exceed the higher of the following: (1) The published monthly average for the calendar month ending two months before the date on which the rate is determined. (2) The rate used to compute the cash surrender values under the policy during the applicable period plus 1 percent per annum. (c) Any insurer offering insurance policies with an adjustable policy loan interest rate shall establish a written pricing or dividend policy in order that the holders of the policies shall receive a benefit from any earnings of the insurer resulting from the use of the adjustable rate, either by means of higher dividends or lower premiums or a combination of both. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  74. 1233.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

    Verify source ↗

    If the maximum interest rate is set under Section 1232(a)(2), the policy must state how often that rate will be determined.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1233. If the maximum rate of interest is determined pursuant to paragraph (2) of subdivision (a) of Section 1232, the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  75. 1234.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

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    The maximum rate for each policy must be reviewed at least once every 12 months, but no more often than once every three months; policy rates may be increased or must be reduced when the change reaches at least one-half of 1 percent per annum.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1234. The maximum rate for each policy shall be determined at regular intervals at least once every 12 months, but not more frequently than once in any three-month period. At the intervals specified in the policy: (1) The rate being charged may be increased whenever the increase as determined under subdivision (b) of Section 1232 would increase that rate by one-half of 1 percent or more per annum. (2) The rate being charged shall be reduced whenever the reduction as determined under subdivision (b) of Section 1232 would decrease that rate by one-half of 1 percent or more per annum. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  76. 12340.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

    Verify source ↗

    The article’s definitions control how terms in this chapter are read, but they do not change any other part of the code.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340. The definitions set forth in this article shall govern the construction of the terms used in this chapter, but shall not affect any other provisions of this code. (Repealed and added by Stats. 1973, Ch. 1130.)
  77. 12340.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    This section defines “title insurance” as insurance, guaranty, or indemnity against certain losses or damage involving title defects, invalid liens or encumbrances, or incorrect title searches.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.1. “Title insurance” means insuring, guaranteeing or indemnifying owners of real or personal property or the holders of liens or encumbrances thereon or others interested therein against loss or damage suffered by reason of: (a) Liens or encumbrances on, or defects in the title to said property; (b) Invalidity or unenforceability of any liens or encumbrances thereon; or (c) Incorrectness of searches relating to the title to real or personal property. (Added by Stats. 1973, Ch. 1130.)
  78. 12340.10.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

    Verify source ↗

    This section defines “abstract of title” and says it is not a title policy.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.10. “Abstract of title” is a written representation, provided pursuant to a contract, whether written or oral, intended to be relied upon by the person who has contracted for the receipt of such representation, listing all recorded conveyances, instruments or documents which, under the laws of this state, impart constructive notice with respect to the chain of title to the real property described therein. An abstract of title is not a title policy as defined in Section 12340.2. (Added by Stats. 1981, Ch. 55, Sec. 1.)
  79. 12340.11.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

    Verify source ↗

    This section defines “preliminary report,” “commitment,” and “binder” in title insurance.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.11. “Preliminary report”, “commitment”, or “binder” are reports furnished in connection with an application for title insurance and are offers to issue a title policy subject to the stated exceptions set forth in the reports and such other matters as may be incorporated by reference therein. The reports are not abstracts of title, nor are any of the rights, duties or responsibilities applicable to the preparation and issuance of an abstract of title applicable to the issuance of any report. Any such report shall not be construed as, nor constitute, a representation as to the condition of title to real property, but shall constitute a statement of the terms and conditions upon which the issuer is willing to issue its title policy, if such offer is accepted. (Added by Stats. 1981, Ch. 55, Sec. 2.)
  80. 12340.13.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    “Business location” means a place of business in California where an underwritten title company or controlled escrow company conducts escrow services.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.13. “Business location” means a facility or other place of business in this state where an underwritten title company or controlled escrow company engages in the business of conducting escrow services. (Added by Stats. 2015, Ch. 370, Sec. 1. (AB 704) Effective January 1, 2016.)
  81. 12340.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    ‘Title policy’ means a written instrument or contract that assumes title insurance liability.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.2. “Title policy” means any written instrument or contract by means of which title insurance liability is assumed. (Added by Stats. 1973, Ch. 1130.)
  82. 12340.3.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    This section defines “business of title insurance” and allows a title insurer to charge a reasonable fee for issuing a letter of indemnity or furnishing a written closing-services statement.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.3. “Business of title insurance” includes: (a) Issuing or proposing to issue any title policy as insurer, guarantor, or indemnitor; (b) Transacting or proposing to transact any phase of title insurance, including solicitation, negotiation preliminary to execution, or execution of a title policy, insuring and transacting matters subsequent to the execution of a title policy and arising out of such policy, excluding reinsurance; (c) The performance by a title insurer, an underwritten title company or a controlled escrow company of any service in conjunction with the issuance or contemplated issuance of a title policy including but not limited to the handling of any escrow, settlement or closing in connection therewith; or the doing of or proposing to do any business, which is in substance the equivalent of any of the above. (d) The issuance, by a title insurer, of a letter of indemnity. Any such letter of indemnity shall be limited to and issued solely for the purpose of indemnifying the commissioner on behalf of any member of the public who transacts an escrow with an underwritten title company, with whom the title insurer has an underwriting agreement. A title insurer may charge a reasonable fee in connection with the issuance of any such letter. No rate or form filing shall be required with respect to any such letter of indemnity. (e) The act of an insurer in furnishing in writing to a prospective purchaser of the insurer’s title policy a statement which assures, and assumes the liability for, the proper performance of services necessary to the conduct of a real estate closing performed by an underwritten title company with whom the insurer maintains an underwriting agreement. A title insurer may charge a reasonable fee in connection with the furnishing of any such statement. No rate or form filing shall be required with respect to any such statement. (Amended by Stats. 1981, Ch. 479, Sec. 1.)
  83. 12340.4.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    This section defines “title insurer,” “domestic title insurer,” and “foreign title insurer.”

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.4. “Title insurer” means any company issuing title policies as insurer, guarantor or indemnitor. “Domestic title insurer” means any title insurer organized under the laws of this state. “Foreign title insurer” means any title insurer organized under the laws of any other jurisdiction. (Added by Stats. 1973, Ch. 1130.)
  84. 12340.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    This section defines “underwritten title company” as a corporation that prepares title searches, examinations, reports, certificates, or abstracts used as the basis for title policies.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.5. “Underwritten title company” means any corporation engaged in the business of preparing title searches, title examinations, title reports, certificates or abstracts of title upon the basis of which a title insurer writes title policies. (Added by Stats. 1973, Ch. 1130.)
  85. 12340.6.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    This section defines “controlled escrow company” and excludes certain banks and savings and loan-related businesses from its application, except for Article 6.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.6. (a) “Controlled escrow company” means any person, other than a title insurer or underwritten title company, whose principal business is the handling of escrows of real property transactions in connection with which title policies are issued, which person, if an artificial person, directly or indirectly, is controlled by, controls, or is under common control with a title insurer, or controls, is controlled by, or is under common control with an underwritten title company, or, if a natural person, is employed by, or controlled by, a title insurer or by an underwritten title company. As used in this section, the term “control” has the meaning set forth in subdivision (c) of Section 1215. (b) Except for Article 6 (commencing with Section 12404), this section does not apply to any person or entity doing business under any law of this state or the United States relating to banks or savings and loan associations. (Amended by Stats. 2017, Ch. 417, Sec. 31. (AB 1696) Effective January 1, 2018.)
  86. 12340.7.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    This section defines “rate” or “rates” for title insurance, with exceptions and excluding miscellaneous charges.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.7. Except as provided in Section 12401.8, and excluding miscellaneous charges, “rate” or “rates” means the charge or charges, whether denominated premium or otherwise, made to the public by a title insurer, an underwritten title company or a controlled escrow company, for all services it performs in transacting the business of title insurance. As used in this section miscellaneous charges means conveyancing fees, notary fees, inspection fees, tax service contract fees and such other fees as the commissioner by regulation may prescribe. (Added by Stats. 1973, Ch. 1130.)
  87. 12340.8.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    This section defines “advisory organization” for title insurance.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.8. “Advisory organization” means every person or entity (other than a title insurer, underwritten title company, or controlled escrow company) which recommends or prepares policy forms or endorsements, or procedural manuals (but not including the making of rates, rating plans, or rating systems), or which collects and furnishes to its members or insurance supervisory officials loss and expense statistics or other statistical information and data relating to the business of title insurance and who otherwise acts in an advisory, as distinguished from a ratemaking, capacity. No duly authorized attorney at law acting in the usual course of his profession nor any entity engaging in the above activity on a nationwide basis shall be deemed to be an advisory organization. (Amended by Stats. 1992, Ch. 991, Sec. 1. Effective January 1, 1993.)
  88. 12340.9.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    This section defines “willful” or “willfully” for violations of this chapter as acting with actual knowledge or belief that the act or omission is a violation, plus specific intent to commit it.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12340.9. “Willful” or “willfully” in relation to an act or omission which constitutes a violation of this chapter means with actual knowledge or belief that such act or omission constitutes such violation and with specific intent to commit such violation. (Added by Stats. 1973, Ch. 1130.)
  89. 12342.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. )

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    This section defines “holders of liens or encumbrances” for this chapter to include certain institutional third parties.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Definitions [12340 - 12342] ( Article 1 repealed and added by Stats. 1973, Ch. 1130. ) ## 12342. For purposes of this chapter, “holders of liens or encumbrances” includes, but is not limited to, the institutional third parties described in Sections 1452 and 1717 of Title 12 of the United States Code. (Added by Stats. 1995, Ch. 433, Sec. 1. Effective January 1, 1996.)
  90. 1235.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

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    A life insurer must give policyholders certain notices about the initial interest rate on policy loans and later rate increases.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1235. The life insurer shall do all of the following: (1) Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan. (2) Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in paragraph (3). (3) Send to policyholders with loans reasonable advance notice of any increase in the rate. (4) Include in the required notices the substance of the pertinent provisions of subdivision (a) of Section 1232 and Section 1233. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  91. 12350.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    Before issuing any policy, every title insurer must deposit $100,000 with the Insurance Commissioner or another designated official of its home state as a guarantee fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12350. Every title insurer, before issuing any policy, shall deposit $100,000 with the Insurance Commissioner or other designated official of its home State as a “guarantee fund” for the security and protection of the holders of, or beneficiaries under, its title policies. (Amended by Stats. 1935, Ch. 292.)
  92. 12351.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    A deposit may be made in U.S. lawful money or in certain authorized securities.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12351. Any such deposit may be made either in lawful money of the United States or in any of the securities, other than collateral trust bonds or notes, authorized for investment, other than excess funds investments, of all the assets of domestic incorporated insurers. (Enacted by Stats. 1935, Ch. 145.)
  93. 12352.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    If a deposit is made in California, the commissioner must approve it first, and the Treasurer must give a receipt to the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12352. If the deposit is made in this state, it shall first be approved by the commissioner who shall make a special deposit thereof in the State Treasury, for the purpose specified in Section 12350. The Treasurer shall give his or her receipt therefor, to the commissioner. (Amended by Stats. 2011, Ch. 426, Sec. 12. (SB 712) Effective January 1, 2012.)
  94. 12353.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    Assets in these deposits may be withdrawn or exchanged for similar assets if the commissioner approves, unless section 12355 provides otherwise.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12353. Except as provided in section 12355, assets in such deposits in this State may, with the approval of the commissioner, be withdrawn or exchanged from time to time for other assets of like character and value. (Amended by Stats. 1935, Ch. 292.)
  95. 12354.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    A solvent depositing insurer is entitled to receive the interest and dividends on assets in the deposit.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12354. As long as the depositing insurer continues solvent, it shall receive the interest and dividends on any assets in the deposit. (Enacted by Stats. 1935, Ch. 145.)
  96. 12355.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    The commissioner may only finalize sale, transfer, or disposal of deposit assets on court order, except in listed cases.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12355. Except on withdrawal of the insurer from this State, or substitution pursuant to section 12353, assets in the deposit in this State shall be subject to final sale, transfer, and disposal of the proceeds thereof by the commissioner only on the order of a court of competent jurisdiction and for the security and protection of the holders of, or beneficiaries under, the depositing insurers title insurance policies. (Amended by Stats. 1935, Ch. 292.)
  97. 12356.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    Mortgage-secured assets deposited in the state must be backed by specified mortgage insurance or title evidence, and the commissioner can require additional title insurance or a guaranty in some cases.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12356. When any part of the assets to be deposited in this State consists of mortgage-secured notes or bonds, or loans upon real property secured by mortgage, such mortgages shall be accompanied by a policy of mortgage insurance issued under the provisions of this code, or by evidence of title issued by a person designated or approved by the commissioner and either authorized by law or found by the commissioner to be competent to issue such evidence. Such evidence of title shall consist either of a full abstract of title, a full certificate of title, or a policy of title insurance, and shall be assigned and approved by, or under the direction of, the commissioner. In any case where he ascertains that the expense thereof would not be unreasonable or such as to make the deposit impracticable, the commissioner may require a policy of title insurance or a guaranty that the abstract is correct and that it shows title to be in the proper party, issued by a corporation authorized to issue such policies or guaranties. (Amended by Stats. 1937, Ch. 732.)
  98. 12357.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    Unless the mortgage is covered by mortgage insurance, the property value tied to each mortgage deposit in this state must be appraised by appraisers selected or approved by the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12357. Unless the mortgage is covered by mortgage insurance, the value of the property covered by each such mortgage constituting all or part of such deposit in this State shall be appraised by one or more appraisers selected or approved by the commissioner. The appraisers shall be familiar with property values of the particular type of property and generally in the region in which the property or some part thereof is situated. (Amended by Stats. 1937, Ch. 732.)
  99. 12358.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    The title insurer making the deposit must pay the reasonable cost of examining the title evidence and making the appraisement.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12358. The reasonable cost of examining such evidence of title and of making such appraisement, shall be paid by the title insurer making the deposit. (Amended by Stats. 1937, Ch. 732.)
  100. 12359.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    A title insurer may not transact any insurance in this state unless it has at least $500,000 in paid-in capital represented by shares of stock.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12359. A title insurer shall not transact any insurance in this state unless it has paid-in capital represented by shares of stock of at least five hundred thousand dollars ($500,000). (Amended by Stats. 1981, Ch. 479, Sec. 2.)
  101. 1236.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

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    A life insurer must keep coverage in force for the policy year if the policy would otherwise end only because of an interest rate change; the loan value is tied to the policy’s cash surrender 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1236. The loan value of the policy shall be equivalent to the cash surrender value of the policy, the minimum requirements of which are specified in Sections 10160 through 10165 for life insurance and in Section 11043, for fraternal benefit society policies or certificates, but no policy shall terminate in a policy year as the sole result of change in the interest rate during that policy year. The life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  102. 12360.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    An insurer that transacts non-title insurance anywhere in the United States is not eligible for a California title-insurance certificate of authority or its renewal.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Title Insurers; Capital and Guarantee Fund Requirements [12350 - 12360] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 12360. An insurer which anywhere in the United States transacts any class of insurance other than title insurance is not eligible for the issuance of a certificate of authority to transact title insurance in this State nor for the renewal thereof. (Amended by Stats. 1951, Ch. 542.)
  103. 1237.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

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    Policies to which Sections 1232 and 1233 apply must set out the substance of those sections.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1237. The substance of the pertinent provisions of Section 1232 and 1233 shall be set forth in the policies to which the provisions apply. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  104. 12370.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 )

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    Every title insurer must annually set aside 10% of premiums collected during the year.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 ) ## 12370. Every title insurer shall annually set apart a sum equal to 10 percent of its premiums collected during the year. Such sums shall be allowed to accumulate until a fund is created equal in amount to 25 percent of the aggregate of the subscribed capital stock of the insurer, or one million dollars ($1,000,000), whichever is the lower amount. After the establishment by a title insurer of an unearned premium reserve, pursuant to Article 3.5 (commencing with Section 12380) of this chapter, such amount shall be reduced by the aggregate amount which shall be set aside and maintained by such insurer in such unearned premium reserve. Such fund shall be known as the “title insurance surplus fund.” (Amended by Stats. 1971, Ch. 1318.)
  105. 12371.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 )

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    The insurer must maintain the title insurance surplus fund as security for policyholders and beneficiaries. Excess over the amount required by Section 12370 may be moved to general assets, and any impairment from a loss must be restored.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 ) ## 12371. The title insurance surplus fund shall be maintained as a further security to holders and beneficiaries of the title policies issued by the insurer. If all or any part of the fund shall at any time be in excess of the amount required by Section 12370, such excess may be transferred by the insurer to its general assets. If at any time the fund is impaired by reason of a loss, the amount by which it is impaired shall be restored in the manner provided for its accumulation. The reporting of a loss is an impairment of such fund for the purposes of this section. (Amended by Stats. 1965, Ch. 272.)
  106. 12372.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 )

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    A domestic insurer may invest funds in materials and plant for title insurance after paying in required capital and depositing the required guarantee fund with the State Treasurer.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 ) ## 12372. Any such domestic insurer, after having its required capital paid in and depositing its required guarantee fund with the State Treasurer, may invest its funds in the preparation and purchase of materials and plant necessary to enable it to engage in the title insurance business. In all statements and proceedings required by law for the ascertainment and determination of the condition of such insurer, such materials and plant shall be treated in one of the following ways: (a) They may be treated as an asset, valued at actual cost to the insurer not in excess of 50 per cent of the aggregate par value of the shares of the insurer’s capital stock then issued outstanding, and apportioned to its title insurance department, including treasury shares; (b) They may be treated as an asset, at such lesser value than that permitted by paragraph (a) of this section as the insurer estimates; (c) They may be omitted entirely from the statement or proceeding. (Amended by Stats. 1939, Ch. 325.)
  107. 12372.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 )

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    If a title plant is not currently maintained, its asset value cannot exceed the last annual statement value, reduced by 1/10 for each year or part-year it remains not maintained.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 ) ## 12372.5. Notwithstanding the provisions of Section 12372, where a title plant is not being currently maintained, the asset value of such plant shall not exceed its asset value as of the last annual statement date preceding the first month such plant is not currently maintained, less 1/10th thereof for each succeeding year or part thereof that such plant is not being currently maintained. For the purposes of this section, a title plant shall be deemed currently maintained so long as it is used in the normal conduct of the business of title insurance, and (1) the owner thereof continues regularly to obtain and index title record data to such plant or to a continuation thereof in a format other than that previously used, including, but not limited to, computerization of such data, or (2) the owner thereof is a participant, in an arrangement for joint use of a title plant system regularly maintained in any format, provided such owner is contractually entitled to receive a copy of the title record data contained in such jointly used title plant system during the period of such owner’s participation therein, either periodically or upon termination of such participation, at a cost not to exceed the actual cost of duplication of such title record data. (Added by Stats. 1978, Ch. 846.)
  108. 12373.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 )

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    A title insurer may not pay dividends unless it has enough remaining profits after keeping specified assets and reserves unimpaired.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 ) ## 12373. A title insurer shall not make any dividends except from profits remaining on hand after retaining unimpaired assets aggregating in value an amount equal to the sum of the following: (a) The aggregate par value of the shares of its capital stock issued and outstanding, including treasury shares; (b) The amount required to be set apart as the title insurance surplus fund; (c) The amount required to be maintained in the unearned premium reserve; (d) The amount required to be maintained in the reserve for unpaid losses and loss adjustment expense; (e) A sum sufficient to pay all liabilities for expenses and taxes and all other indebtedness. (Amended by Stats. 1965, Ch. 272.)
  109. 12374.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 )

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    A title insurer may not make loans from its assets to its officers, directors, employees, or their family members, unless subdivision (g) of Section 1105 authorizes it.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 ) ## 12374. Except as otherwise authorized by subdivision (g) of Section 1105, a title insurer shall not directly or indirectly make a loan from its assets to any of its officers, directors or employees, or to any member of the family of any officer or director. Any officer, director, agent, or employee of any such insurer who knowingly consents to any violation of this section is guilty of a misdemeanor. (Amended by Stats. 1981, Ch. 55, Sec. 3.)
  110. 12375.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 )

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    The commissioner may require a reinsurer to increase its title insurance surplus fund when a withdrawing title insurer reinsures policies with a reinsurer whose surplus fund is not fully made up.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 ) ## 12375. Whenever a title insurer, upon withdrawing from insurance business in this State, desires to reinsure its policies with a title insurer whose “title insurance surplus fund” is not fully made up, the commissioner may require the reinsurer to increase its “title insurance surplus fund.” The amount of increase shall not be greater than the amount in the withdrawing insurer’s “title insurance surplus fund” nor greater than will fully make up the reinsurer’s title insurance surplus fund. Such increase may be made a condition of the commissioner’s approval of the reinsurance plan. (Enacted by Stats. 1935, Ch. 145.)
  111. 12376.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 )

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    If an underwritten title company goes into bankruptcy, receivership, or conservation, affected title insurers must pay their proportionate share of specified costs and escrow shortages, and the commissioner must calculate and notify those amounts.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 ) ## 12376. (a) If an underwritten title company is placed into bankruptcy, receivership, or conservation by the commissioner, each title insurer operating under an underwriting agreement with the underwritten title company during the six months prior to the earliest of the conservation, bankruptcy, or receivership shall be liable for its proportionate share of the commissioner’s costs and any escrow and subescrow account shortages as determined by the calculations set forth in subdivisions (b) and (c). (b) If, during the six months prior to the earliest of the establishment of a conservation, bankruptcy, or receivership under subdivision (a), the underwritten title company was authorized by underwriting agreements to issue title policies for more than one title insurer, the liability of each title insurer is determined by multiplying the amount of the total escrow and subescrow shortages, as well as the costs, and expenses, as set forth in subdivision (c), by that title insurer’s percentage of the underwritten title company’s net premiums for policies issued by each title insurer during the 12-month period preceding the earliest of the establishment of the conservation, bankruptcy, or receivership, with each title insurer’s liability pursuant to this subdivision to be referred to as its proportionate share. (c) When determining the total proportionate liability of each title insurer, the commissioner shall include the following: (1) The commissioner’s costs and expenses of seizing and taking control of the underwritten title company’s offices, operations, and assets. (2) The commissioner’s costs and expenses of handling, adjusting, and closing all subescrow and escrow accounts, including the costs and expenses of determining whether shortages exist in any subescrow and escrow accounts. (3) Other costs and expenses incurred by the commissioner in connection with borrowing from the Insurance Fund pursuant to subdivision (g) and foregone earnings or interest of the Insurance Fund resulting from the borrowing. As used in this subdivision, “commissioner’s costs and expenses” includes the costs and expenses of all agents and contractors retained by the commissioner in performing functions set forth in this subdivision, and “subescrow” and “escrow” means title subescrows and escrows. These calculations shall result in 100 percent of the shortage, costs, and expenses being proportionately allocated to each title insurer authorized to issue title policies in the last six months preceding the underwritten title company being placed into bankruptcy, receivership, or conservation. (d) (1) The commissioner shall make an initial estimate of the total shortage in the escrow and subescrow accounts and the commissioner’s costs and expenses as provided in subdivision (c) and shall provide this estimate in writing to each title insurer determined to have liability under this section as soon as practicable. The initial estimate shall be substantiated by a summary of the accounting information pertinent to the commissioner’s estimate of the escrow and subescrow shortfalls and the commissioner’s costs and expenses. (2) The commissioner shall make further estimates, as necessary, of the total shortage in the escrow and subescrow accounts and the commissioner’s costs and expenses as provided in subdivision (c) and shall provide the estimates in writing to each title insurer determined to have liability under this section. These estimates shall be substantiated by a detailed summary of pertinent accounting information. (3) After receiving an estimate pursuant to paragraphs (1) and (2), each title insurer having liability under this section shall, within 30 days after written notification, deposit its proportionate share of the shortage, costs, and expenses into an escrow account established by the commissioner for the purpose of reimbursement to subescrow or escrow accountholders, reimbursement to the commissioner in the event that the commissioner advances or has advanced payments to subescrow or escrow accountholders, or payment or reimbursement of the commissioner’s costs and expenses pursuant to subdivision (c). If a title insurer fails to make a payment required by this subdivision within the 30-day period, the title insurer shall pay a penalty calculated at the rate of 10 percent per annum on the unpaid amount until the payment is received by the commissioner. (e) Nothing in this section relieves a person of liability under any other provision of law that he or she may have for a shortage as set forth in subdivision (a). A title insurer, on becoming liable for a shortage as set forth in this section, is entitled to enforce every available remedy, or bring any cause of action that would have been available to a person compensated by the title insurer. (f) A title insurer shall be entitled to make a claim for reimbursement for subescrow or escrow shortages paid to subescrow or escrow accountholders and for payments of its proportionate share pursuant to subdivision (c). Those claims shall be given the same preference as those claims referenced in paragraph (2) of subdivision (a) of Section 1033. (g) A title insurer shall be entitled to make a claim for reimbursement for payment of its proportionate share of the commissioner’s costs and expenses paid pursuant to subdivision (c). Those claims shall be given the same preference as those claims referenced in paragraph (2) of subdivision (a) of Section 1033. The commissioner shall return to each title insurer its proportional share of any funds remaining in the escrow account after all liabilities in subdivision (a) have been satisfied. (h) In order to minimize potential losses and negative impacts on consumers having money in escrow accounts held by an underwritten title company taken into conservation, bankruptcy, or receivership by the commissioner, the commissioner shall hire all necessary escrow consultants or other experts necessary to achieve this goal. (i) The commissioner may borrow from the Insurance Fund to cover shortages in subescrow or escrow accounts and to pay costs and expenses set forth in subdivision (c). (Amended by Stats. 2002, Ch. 899, Sec. 3. Effective January 1, 2003.)
  112. 12377.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 )

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    Escrow funds and traceable property tied to an underwritten title company’s shortages are kept out of the company’s estate, and responsible officials must try to trace those funds and assets; any reimbursement to a title insurer cannot exceed its liability under Section 12376.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Title Insurers: Finances and Investments [12370 - 12377] ( Article 3 enacted by Stats. 1935 ) ## 12377. (a) All escrow funds received by an underwritten title company that are subject to Section 12413.5 shall not be considered part of the estate of the underwritten title company for purposes of liquidation, receivership, bankruptcy, or conservation pursuant to Article 14 (commencing with Section 1010) of Chapter 1 of Part 2 of Division 1. (b) Where an underwritten title company is placed into conservation, receivership, or bankruptcy and the escrow accounts held by the company are found to have shortages, the department, conservator, liquidator, receiver, or bankruptcy trustee shall do everything reasonably possible to trace these moneys to other depository accounts or assets. (c) Any real or personal property traceable to shortages in the escrow accounts shall not be considered part of the estate available to other claimants under Section 1033. Those assets shall be liquidated and paid in the following order: (1) if the commissioner has paid or advanced funds to subescrow or escrow accountholders from sources other than the escrow established pursuant to subdivision (c) of Section 12376, they shall be paid to the commissioner to the extent that the commissioner has not been repaid by title insurers having liability under Section 12376, (2) they shall be deposited into an escrow established pursuant to subdivision (c) of Section 12376, and (3) they shall be directly reimbursed to the title insurer or insurers that have reimbursed escrow depositors under Section 12376. In no event shall a title insurer be reimbursed an amount in excess of its liability as determined in Section 12376. (Amended by Stats. 2002, Ch. 899, Sec. 4. Effective January 1, 2003.)
  113. 1238.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

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    This section defines terms used for policy loans, policyholders, and policies.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1238. For the purposes of this section: (1) The rate of interest on policy loans permitted under this section includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy. (2) “Policy loan” includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they fell due. (3) “Policyholder” includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer. (4) “Policy” includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  114. 12380.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    This section defines key terms used in this article on title insurance reserves.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12380. Unless the provision or context otherwise requires, the following definitions govern the construction of this article: (a) “Total charges for policies of title insurance” means (i) the total of fees and charges as shown on policies, as required by Section 12412, less any amount paid for coinsurance of such policy to any coinsuring title insurer and (ii) the total sum charged by any coinsuring title insurer for acting as a coinsurer in respect to any policy of title insurance. (b) “Ceding company” means a title insurer which shall have purchased a policy or contract of reinsurance from a reinsuring company. (c) “Reinsuring company” means a title insurer which shall have sold a policy or contract of reinsurance to a ceding company. (d) “Unearned premium reserve” means that reserve that is generally known as the statutory premium reserve. (Amended by Stats. 1993, Ch. 974, Sec. 7. Effective January 1, 1994.)
  115. 12381.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    Domestic title insurers must create and keep an unearned premium reserve, and admitted foreign insurers must keep a similar reserve for their California business.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12381. Every domestic title insurer shall, in addition to other reserves, establish and maintain a reserve to be known as the “unearned premium reserve” for title insurance, which shall, at all times for all purposes, be deemed and shall constitute the unearned portion of premiums due or received on all of its business wherever transacted and shall be charged as a reserve liability of such title insurer in determining its financial condition. The unearned premium reserve shall be retained and held by such title insurer for the protection of the policyholders’ interest in policies which have not expired. Except as provided in Section 12385, assets equal to the amount of such reserve shall not be subject to distribution among depositors or other creditors or stockholders of such title insurer until all claims of holders of policies and contracts of title insurance of such title insurer have been paid in full and all liability on the policies or other contracts of title insurance, whether contingent or actual, has been discharged or lawfully reinsured. Income from the investment of all or any part of such reserve shall be the unrestricted property of the title insurer. Every admitted foreign insurer shall maintain a like reserve under like conditions in respect to its California business. (Added by Stats. 1965, Ch. 272.)
  116. 12382.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    Every title insurer’s unearned premium reserve must consist of the amounts described in this section.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12382. The unearned premium reserve of every title insurer shall consist of: (a) Such amount as would have been required to be set aside in said reserve on all policies or contracts of title insurance issued during the calendar years 1962, 1963 and 1964, if this article had been effective at and after the date that such policies or contracts were written, less the amount of withdrawals that would have been permitted if this article had been so effective; and (b) The amount of all additions required to be made to such reserve by this article less the withdrawals therefrom permitted by this article. (Added by Stats. 1965, Ch. 272.)
  117. 12382.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    Title insurers must add specified percentages of policy charges to their unearned premium reserve, with different rates and transition rules depending on the time period and reinsurance status.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12382.2. (a) Out of total charges for policies of title insurance, a title insurer shall add to and set aside in its unearned premium reserve commencing as of January 1, 1965, an amount equal to 2 percent of those total charges for policies of title insurance, which amount shall be deemed and shall constitute the unearned premiums due or received from all such policies or contracts. Except as otherwise provided in Section 12382.6, if any policy of title insurance shall be reinsured, the reinsuring company shall be required to set aside in its unearned premium reserve only that portion, if any, of that 2 percent as shall have not theretofore been set aside by the ceding company. This subdivision shall apply to policies issued and reinsured prior to January 1, 1988. (b) Out of total charges for policies of title insurance, a title insurer shall add to and set aside in its unearned premium reserve, an amount equal to 21/2 percent of those total charges for policies of title insurance, which amount shall be deemed and shall constitute the unearned premiums due or received from all such policies or contracts. Except as otherwise provided in Section 12382.6, if any policy of title insurance shall be reinsured, the reinsurer shall be required to set aside in its unearned premium reserve only that portion, if any, of the 21/2 percent as shall have not theretofore been set aside by the ceding company. This subdivision shall apply to policies issued and reinsured on and after January 1, 1988, and prior to January 1, 1994. (c) Out of total charges for policies of title insurance and, commencing no later than the year beginning January 1, 1994, a title insurer shall add to and set aside in its unearned premium reserve an amount equal to 41/2 percent of the sum of the following items, for all jurisdictions where the title insurer operates, set forth in the title insurer’s annual statement filed in this state: (1) “Direct premiums written” as set forth in Schedule T. (2) “Other income” as set forth in Schedule T. (3) “Premiums written during year—reinsurance assumed” less “Premiums for reinsurance ceded during year.” (d) The insurer shall calculate an adjusted unearned premium reserve as of December 31, 1993. The adjusted unearned premium reserve shall be calculated as if subdivision (c) of this section and subdivision (c) of Section 12382.5 had been in effect for all years beginning on or after January 1, 1974. For purposes of this calculation, the balance of the unearned premium reserve as of December 31, 1973, shall be deemed to be zero. If the adjusted unearned premium reserve so calculated exceeds the aggregate amount set aside for unearned premiums in the insurer’s December 31, 1993, Annual Statement (Form 9), the insurer shall, out of total charges for policies of title insurance, increase its unearned premium reserve by an amount that is not less than one-sixth of that excess in each of the succeeding six years, commencing no later than the year beginning January 1, 1994, until the entire excess has been added. (Amended by Stats. 1994, Ch. 353, Sec. 1. Effective January 1, 1995.)
  118. 12382.3.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    A title insurer must deduct certain additions to the unearned premium reserve when calculating net profits, unless those amounts were already deducted from net profits or earned surplus.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12382.3. The aggregate amount set aside in the unearned premium reserve shall be separately recorded and reserved in respect to such policies and contracts issued in each calendar year. All amounts set aside as additions to the unearned premium reserve, to the extent that the same have not previously been deducted from net profits or earned surplus, shall be deducted in determining net profits of any title insurer. (Added by Stats. 1965, Ch. 272.)
  119. 12382.4.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    For certain reserve calculations, title insurance and reinsurance policies are treated as dated July 1 of the year they were issued.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12382.4. For the purpose of determining the amounts of the unearned premium reserve that may be withdrawn pursuant to Section 12382.5 and the interest of the policyholders therein under Section 12385, all policies and contracts of title insurance or reinsurance shall be considered as dated on July 1 of the year of issue. (Added by Stats. 1965, Ch. 272.)
  120. 12382.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    This section requires certain amounts in an unearned premium reserve to be released to net profits on a set schedule.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12382.5. (a) The aggregate of the amounts set aside in unearned premium reserve in any calendar year pursuant to subdivision (a) of Section 12382.2 shall be released from that reserve and restored to net profits pursuant to the following formula: one-tenth of that aggregate sum on July 1 of each of the five years next succeeding the year of addition to the reserve and one-thirtieth of that aggregate sum on July 1 of each succeeding year thereafter until the entire sum shall have been so released and restored to net profits. The aggregate of the amounts set aside in unearned premium reserve pursuant to subdivision (a) of Section 12382 shall be released from the reserve and restored to net profits and surplus pursuant to the foregoing formula, provided that the amounts so set aside shall be treated as if subdivision (a) of Section 12382 and this section had been effective during the calendar years 1962, 1963, and 1964. (b) The aggregate of the amounts set aside in unearned premium reserve in any calendar year pursuant to subdivision (b) of Section 12382.2 shall be released from the reserve and restored to net profits pursuant to the following formula: one-tenth of the aggregate sum on July 1 of each of the 10 years next succeeding the year of addition to the reserve until the entire sum shall have been so released and restored to net profits. (c) The aggregate of the amounts set aside in unearned premium reserve in any calendar year pursuant to subdivision (c) of Section 12382.2 shall be released from the reserve and restored to net profits over a period of 20 years pursuant to the following formula: 10 percent of the aggregate sum on July 1 of each of the five years next succeeding the year of addition; 9 percent of the aggregate sum on July 1 of each of the next succeeding five years; and one-half of 1 percent of the aggregate sum on July 1 of each of the last 10 years. (d) The aggregate of the amounts set aside in unearned premium reserve in any calendar year as adjustments to the insurer’s unearned premium reserve pursuant to subdivision (d) of Section 12382.2 shall be released from the reserve and restored to net profits, or equity if the additions required by subdivision (d) of Section 12382.2 reduced equity directly, over a period not exceeding 10 years pursuant to the following table: Year of addition Release 1994, or earlier Equally over 10 years 1995 Equally over 9 years 1996 Equally over 8 years 1997 Equally over 7 years 1998 Equally over 6 years 1999 Equally over 5 years (Amended by Stats. 1994, Ch. 353, Sec. 2. Effective January 1, 1995.)
  121. 12382.6.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    When a title insurance reinsurance transaction covers substantially all outstanding liability, the reinsuring company must treat the charge received as unearned premium and add it to its unearned premium reserve.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12382.6. If substantially the entire outstanding liability under all policies and contracts of title insurance or reinsurance of any ceding company shall be reinsured, pursuant to and as authorized by Section 12385, the total charge received by any reinsuring company authorized to transact the business of title insurance in this state shall constitute, in its entirety, unearned portions of original premiums, and shall be added to its unearned premium reserve and shall be deemed, for recovery purposes, to have been provided for liabilities assumed during the year of such reinsurance. The amount of such addition to the unearned premium reserve of such reinsuring company shall be not less than two-thirds (2/3rds) of the amount of the unearned premium reserve required to be maintained by the ceding company at the time of such reinsurance. (Added by Stats. 1965, Ch. 272.)
  122. 12383.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    A title insurer must hold amounts in its unearned premium reserve as cash on hand or invest them in trust-fund-suitable investments.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12383. All amounts set aside in the unearned premium reserve of a title insurer shall be held either as cash on hand or shall be deposited or invested in those investments suitable for the investment of trust funds, as provided in Section 16040 of the Probate Code. (Amended by Stats. 1999, Ch. 187, Sec. 1. Effective January 1, 2000.)
  123. 12384.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    A title insurer must promptly notify the commissioner in writing if its unearned premium reserve falls below the required amount and the deficiency is not promptly cured. The insurer may not issue more title insurance or reinsurance policies until the deficiency is fixed and written approval is received from the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12384. If the aggregate amount set aside by a title insurer in its unearned premium reserve should at any time be less than the amount required to be maintained in such reserve, and the deficiency shall not be promptly cured, such title insurer shall forthwith give written notice thereof to the commissioner. Any such title insurer shall not thereafter issue any further policies or contracts of title insurance or reinsurance until the deficiency shall have been eliminated and until it shall have received written approval from the commissioner authorizing it to again issue such policies and contracts of title insurance and reinsurance. For the purpose of determining the aggregate amount set aside by a title insurer in its unearned premium reserve, any portion of such reserve which shall have been invested shall be valued at the purchase price or the fair market value of such investment on the date that such investment was made. (Added by Stats. 1965, Ch. 272.)
  124. 12385.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    When a title insurer becomes insolvent, is being liquidated or dissolved, or is in the commissioner’s possession, its unearned premium reserve must be used only for the section’s specified purposes.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12385. If a title insurer shall at any time become insolvent, be in the process of liquidation or dissolution or be in the possession of the commissioner, all amounts set aside in the unearned premium reserve shall be used and applied as follows: (a) Such amount up to the whole of the reserve as is necessary may be used with the written approval of the commissioner to pay for reinsurance of the liability of such title insurer under all outstanding policies and contracts of title insurance or reinsurance as to which claims for losses by holders thereof are not then pending. The amount of the unearned premium reserve not so used shall be transferred to the general assets of the title insurer to be held and distributed subject to the limitations imposed by this section. (b) The assets of a title insurer other than the unearned premium reserve shall be available to pay claims for losses sustained by holders of policies then pending or arising up to the time reinsurance is effected. In the event that claims for losses are in excess of such other assets of a title insurer, the excess of such claims, when established, shall be paid pro rata out of surplus assets attributable to the unearned premium reserve to the extent of such surplus, if any. (Added by Stats. 1965, Ch. 272.)
  125. 12386.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    If reinsurance is not obtained, certain title insurer funds become a trust fund held by the commissioner for 20 years, and policyholder claims are paid from that fund as they arise.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12386. In the event that reinsurance is not obtained, as authorized by Section 12385, the unearned premium reserve and assets constituting the guarantee fund of the title insurer, or so much as remains thereof after outstanding claims have been paid, shall constitute a trust fund to be held by the commissioner for twenty (20) years, out of which claims of policyholders shall be paid as they arise. The balance, if any, of such fund shall, at the expiration of twenty (20) years, constitute general assets of the title insurer. (Added by Stats. 1965, Ch. 272.)
  126. 12387.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    A title insurer from outside California that does business in California may deduct certain reserve additions required by its home state if the home-state reserve rules are substantially similar and reciprocal.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12387. Where a title insurer organized or incorporated under the laws of any state other than California does business in California, if the laws of the state of its domicile obligate such company to create and maintain an unearned premium reserve for purposes substantially similar to those of this article, any amounts required by the law of such state to be added to such reserve by reason of business done in California shall be deducted from any amounts required by this article to be set aside by such title insurer in an unearned premium reserve for its California business. The provisions of this section shall be applicable only to title insurers organized or incorporated in those states whose laws provide that a title insurer organized and incorporated under the laws of California and which does business in such other state will be permitted a deduction substantially similar to that provided by this section with respect to any unearned premium reserve requirements for business done in that state. (Added by Stats. 1965, Ch. 272.)
  127. 12388.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. )

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    Every title insurer must keep a reserve for unpaid losses and loss adjustment expense.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.5. Unearned Premium Reserve and Reserve for Unpaid Losses and Loss Expense [12380 - 12388] ( Article 3.5 added by Stats. 1965, Ch. 272. ) ## 12388. Every title insurer shall, in addition to other reserves establish and maintain a reserve to be known as the “reserve for unpaid losses and loss adjustment expense”, which shall be used for the payment of losses incurred as a result of liability arising under policies of title insurance and the payment of adjustment expenses necessary for the settlement of or defense against claims of any such liability. Said reserve shall be in an amount equal to the sum of (1) the estimated amounts necessary to pay unpaid losses, plus (2) the estimated amounts of loss adjustment expense necessary to settle or defend against every claim presented pursuant to notice from or on behalf of every insured that may result in a loss to or cause expense to be incurred by a title insurer for the proper disposition of the claim. Every title insurer shall calculate such reserve by making a careful estimate in each year of the amounts anticipated to be reasonably necessary for both such purposes. The sum of the items so estimated shall be the total amount of the reserve for unpaid losses and loss adjustment expenses of such title insurer. The amounts so estimated may be revised from time to time as circumstances warrant and reduced by the amount of payments made, but shall be redetermined at least once each year. The amounts set aside in such reserve in any year shall be deducted in determining the net profits for such period of any title insurer. (Added by Stats. 1965, Ch. 272.)
  128. 12389.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. )

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    This section lets certain underwritten title companies do title-search and escrow work, but only if they meet licensing, financial, audit, and bonding or deposit requirements.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. ) ## 12389. (a) On and after July 1, 2016, an underwritten title company as defined in Section 12340.5 that is a stock corporation may, subject to subdivision (b), (1) engage in the business of preparing title searches, title reports, title examinations, or certificates or abstracts of title, upon the basis of which a title insurer writes title policies, and (2) conduct escrow services through business locations, as defined in Section 12340.13, in counties in which the underwritten title company is licensed to conduct escrow services regardless of the location of the real or personal property involved in the transaction. (b) (1) Only a domestic corporation may be licensed under this section and no underwritten title company, as defined in Section 12340.5, may become licensed under this section, or change the name under which it is licensed or operates, unless it has first complied with Section 881. (2) (A) Depending upon the county or counties in which the company is licensed to transact business, it shall maintain required minimum net worth and a bond or cash deposit as follows: Aggregate number of documents recorded and documents filed in the preceding calendar year in all counties where the company is licensed to transact business Amount of required minimum net worth Amount of bond or cash deposit Number of documents Less than 50,000 ........................ $ 75,000 $ 50,000 50,000 to 100,000 ........................ 120,000 50,000 100,000 to 500,000 ........................ 200,000 100,000 500,000 to 1,000,000 ........................ 300,000 100,000 1,000,000 or more ........................ 400,000 100,000 (B) “Net worth” for the purposes of this section is defined as the excess of assets over all liabilities and required reserves. The company may carry as an asset the actual cost of its title plant, provided the value ascribed to that asset shall not exceed the aggregate value of all other assets. (C) If a title plant of an underwritten title company is not currently maintained, the asset value of the plant shall not exceed its asset value as determined in the preceding paragraph as of the date to which that plant is currently maintained, less one-tenth thereof for each succeeding year or part of the succeeding year that the plant is not being currently maintained. For the purposes of this section, a title plant shall be deemed currently maintained so long as it is used in the normal conduct of the business of title insurance, and (i) the owner of the plant continues regularly to obtain and index title record data to the plant or to a continuation thereof in a format other than that previously used, including, but not limited to, computerization of the data, or (ii) the owner of the plant is a participant, in an arrangement for joint use of a title plant system regularly maintained in any format, provided the owner is contractually entitled to receive a copy of the title record data contained in the jointly used title plant system during the period of the owner’s participation therein, either periodically or upon termination of that participation, at a cost not to exceed the actual cost of duplication of the title record data. (D) An underwritten title company shall at all times maintain current assets of at least ten thousand dollars ($10,000) in excess of its current liabilities, as current assets and liabilities may be defined pursuant to regulations made by the commissioner. In making the regulations, the commissioner shall be guided by generally accepted accounting principles followed by certified public accountants in this state. (3) (A) An underwritten title company shall obtain from the commissioner a license to transact its business. The license shall not be granted until the applicant conforms to the requirements of this section and all other provisions of this code specifically applicable to the applicant. After issuance the holder of the license shall continue to comply with the requirements as to its business set forth in this code, in the applicable rules and regulations of the commissioner, and in the laws of this state. (B) An underwritten title company that possesses, or is required to possess, a license pursuant to this section shall be subject as if an insurer to the provisions of Article 8 (commencing with Section 820) of Chapter 1 of Part 2 of Division 1, and is deemed to be subject to authorization by the Insurance Commissioner within the meaning of subdivision (e) of Section 25100 of the Corporations Code. (C) The license may be obtained by filing an application on a form prescribed by the commissioner accompanied by a filing fee of eight hundred forty-nine dollars ($849). The license when issued shall be for an indefinite term and shall expire with the termination of the existence of the holder, subject to the annual renewal fee imposed under Sections 12415 and 12416. (D) An underwritten title company seeking to extend its license to an additional county shall pay a four-hundred-ninety-four-dollar ($494) fee for each additional county, and shall furnish to the commissioner evidence, at least sufficient to meet the minimum net worth requirements of paragraph (2), of its financial ability to expand its business operation to include the additional county or counties. (4) (A) An underwritten title company shall furnish an audit to the commissioner on the forms provided by the commissioner annually, either on a calendar year basis on or before March 31 or, if approved in writing by the commissioner in respect to any individual company, on a fiscal year basis on or before 90 days after the end of the fiscal year. The time for furnishing any audit required by this paragraph may be extended, for good cause shown, on written approval of the commissioner for a period, not to exceed 60 days. Failure to submit an audit on time, or within the extended time that the commissioner may grant, is grounds for an order by the commissioner to accept no new business pursuant to subdivision (g). The audits shall be private, except that a synopsis of the balance sheet on a form prescribed by the commissioner may be made available to the public. (B) The audits shall be made in accordance with generally accepted auditing standards by an independent certified public accountant or independent licensed public accountant whose certification or license is in good standing at the time of the preparation. The fee for filing the audit shall be seven hundred fifty dollars ($750). (C) The commissioner may refuse to accept an audit or order a new audit for any of the following reasons: (i) An adverse result in any proceeding before the California Board of Accountancy affecting the auditor’s license. (ii) The auditor has an affiliation with the underwritten title company or any of its officers or directors that would prevent his or her reports on the company from being reasonably objective. (iii) The auditor has been convicted of a misdemeanor or felony based on his or her activities as an accountant. (iv) A judgment adverse to the auditor in any civil action finding him or her guilty of fraud, deceit, or misrepresentation in the practice of his or her profession. (D) A company that fails to file an audit or other report on or before the date it is due shall pay to the commissioner a penalty fee of two hundred eighty-three dollars ($283) and on failure to pay that or another fee or file the audit required by this section shall forfeit the privilege of accepting new business until the delinquency is corrected. (c) An underwritten title company may engage in the escrow business and act as escrow agent, provided that: (1) It maintains a record of all receipts and disbursements of escrow funds. (2) (A) It maintains a bond satisfactory to the commissioner in the amount set forth in subparagraph (A) of paragraph (2) of subdivision (b). The bond shall run to the state for the use of the state, and for any person who has cause against the obligor of the bond or under the provisions of this chapter. (B) (i) In lieu of the bond described in subparagraph (A), the company may maintain a deposit in the amount set forth in subparagraph (A) of paragraph (2) of subdivision (b), and in a form permitted by Section 12351, with the commissioner, who shall immediately make a special deposit in that amount in the State Treasury. The deposit shall be subject to Sections 12353, 12356, 12357, and 12358. As long as there are no claims against the deposit, all interest and dividends thereon shall be paid to the depositor. The deposit shall be security for the same beneficiaries and purposes as the bond, as set forth in subdivision (d). The deposit shall be maintained until four years after all escrows handled by the depositor have been closed. (ii) The commissioner may release the deposit prior to the passage of the four-year period described in clause (i) upon presentation of evidence satisfactory to the commissioner of either a statutory merger of the depositor into a licensee subject to the jurisdiction of the commissioner, or a valid assumption agreement under which the liability of the depositor stemming from escrow transactions handled by it is assumed by a licensee subject to the jurisdiction of the commissioner. (iii) With the foregoing exceptions, the deposit shall be returned to the depositor or lawful successor in interest following the four-year period described in clause (i) upon presentation of evidence satisfactory to the commissioner that there are no claims against the deposit arising out of escrow transactions handled by the depositor. If claims against the deposit are presented to the commissioner, the commissioner may pay a valid claim or claims until the deposit amount is exhausted. If the commissioner has evidence of one or more claims against the depositor, and the depositor is in conservatorship, bankruptcy, or liquidation proceedings, the commissioner may release the deposit to the conservator, trustee, or liquidator. If the depositor is not in conservatorship, bankruptcy, or liquidation, the commissioner may interplead the deposit by special endorsement to a court of competent jurisdiction for distribution to claimants on the deposit. (d) (1) The bond provided by a surety insurer pursuant to subdivision (c) naming the underwritten title company as principal obligor or the letter of credit of an issuing bank shall be subject to the following conditions: (A) The licensee shall faithfully conform to and abide by the provisions of this chapter and all of the rules made by the commissioner under this chapter concerning the conduct of escrow services. (B) The licensee will honestly and faithfully apply all funds received, and will faithfully and honestly perform all obligations and undertakings under this chapter, concerning the conduct of escrow services. (2) In determining the liability of the principal and the sureties under the bond, any money recovered to restore any deficiency in the trust shall not be considered as an asset of the liquidation subject to the assessment for the cost of the liquidation. (3) The surety under the bond, or the issuing bank of a letter of credit, may pay the full amount of its liability thereunder to the commissioner as conservator, liquidator, receiver, or anyone appointed by the commissioner as a conservator, liquidator, or receiver in lieu of payment to the state or persons having a cause of action against the principal of a bond or applicant under a letter of credit, and upon that payment the surety on the bond, or the issuing bank under a letter of credit shall be completely released, discharged, and exonerated from further liability under the bond or letter of credit, as applicable. The conservator, liquidator, or receiver may use the proceeds of the bond, or letter of credit, for any purposes, including the funding of the costs of conservatorship, receivership, or liquidation. (4) If there is no reasonable or adequate admitted market for surety bonds as required by this section, the commissioner may act pursuant to Section 1763.1 or, for good cause shown, may permit a letter of credit in lieu thereof, and in the amount of the bond or deposit required by this section. In that case, the commissioner may fashion the letter of credit requirements as appropriate to the circumstances and cause. (e) (1) On and after July 1, 2016, the commissioner shall promptly release to the depositor, upon application, all escrow-related deposits previously made pursuant to paragraph (2) as that paragraph read on June 30, 2016, if any of the following occurs: (A) The underwritten title company has provided to the commissioner bond coverage, a deposit, or an approved irrevocable letter of credit as set forth in this subdivision. (B) Upon presentation of evidence satisfactory to the commissioner of either a statutory merger of the underwritten title company depositor into a licensee or certificate holder subject to the jurisdiction of the commissioner, or a valid assumption agreement under which all liability of the depositor stemming from escrow transactions handled by it is assumed by a licensee or certificate holder subject to the jurisdiction of the commissioner. (2) Otherwise, the deposit shall be promptly returned to the depositor, its duly appointed trustee in bankruptcy, or its lawful successor in interest upon application for release following the four-year period specified in paragraph (2) of subdivision (c) as that paragraph read on June 30, 2016, unless the commissioner has received claims against the deposit stemming from escrow transactions handled by the depositor. If the commissioner has received one or more claims against the depositor, and the depositor is not in conservatorship, bankruptcy, or liquidation, the commissioner may interplead the deposit by special endorsement to a court of competent jurisdiction for distribution on the basis that claims against the depositor stemming from escrow transactions handled by the depositor have priority in the distribution over other claims against the depositor. (f) The commissioner shall, whenever it appears necessary, examine the business and affairs of a company licensed under this section. The examination shall be at the expense of the company. (g) (1) At any time that the commissioner determines, after notice and hearing, that a company licensed under this section has willfully failed to comply with a provision of this section, the commissioner shall make his or her order prohibiting the company from conducting its business for a period of not more than one year. (2) A company that violates the commissioner’s order is subject to seizure under Article 14 (commencing with Section 1010) of Chapter 1 of Part 2 of Division 1, is guilty of a misdemeanor, and may have its license revoked by the commissioner. Any person aiding and abetting any company in a violation of the commissioner’s order is guilty of a misdemeanor. (h) The purpose of this section is to maintain the solvency of the companies subject to this section and to protect the public by preventing fraud and requiring fair dealing. In order to carry out these purposes, the commissioner may make reasonable rules and regulations to govern the conduct of its business of companies subject to this section. The rules and regulations shall be adopted, amended, or repealed in accordance with the procedures provided in Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. (i) The name under which each underwritten title company is licensed shall at all times be an approved name. The fee for filing an application for a change of name shall be two hundred eighty-three dollars ($283). Each company shall be subject to Article 14 (commencing with Section 1010) and Article 14.5 (commencing with Section 1065.1) of Chapter 1 of Part 2 of Division 1. (j) This section does not prohibit an underwritten title company from engaging in escrow, settlement, or closing activities on properties located outside this state if those activities do not violate the laws of that other state or country. (Amended by Stats. 2017, Ch. 534, Sec. 79. (AB 1699) Effective January 1, 2018.)
  129. 12389.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. )

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    The commissioner must review an applicant’s qualifications before granting or reissuing a license to act as an underwritten title company, and must issue or reissue the license unless the applicant is found materially deficient on one or more listed items.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. ) ## 12389.1. Before granting a license or a reissued license to act as an underwritten title company to any applicant, the commissioner shall consider the qualifications of the applicant in respect to the following subjects: (a) minimum net worth and working capital; (b) reasonableness of its plan of operation; (c) lawfulness and quality of investments; (d) financial stability; (e) competency, character, and integrity of management; (f) ownership and control of issued and outstanding shares; (g) fairness and honesty of methods of doing business; (h) method by which the applicant was promoted if any of its promoters remain as stockholders or in management; and (i) hazard to the public. Upon consideration of all relevant qualifications, the commissioner shall issue or reissue a license to act as an underwritten title company to the applicant, unless the commissioner shall have made a finding, or findings, that the applicant is materially deficient in respect to one or more of the items outlined herein. (Added by Stats. 1987, Ch. 417, Sec. 3.)
  130. 12389.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. )

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    A holder of a license to act as an underwritten title company must keep complying with the business requirements in Section 12389.1, other applicable sections of the code, and other California laws after the license is issued or reissued.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. ) ## 12389.2. After the issuance or reissuance of a license to act as an underwritten title company, the holder shall continue to comply with the requirements as to its business set forth in Section 12389.1 and in the other applicable sections of this code, and in the other laws of this state. (Added by Stats. 1987, Ch. 417, Sec. 4.)
  131. 12389.3.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. )

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    If a stock certificate requires department consent before transfer, the request must be submitted to the department, and certain small transfers must be approved or denied within 60 days.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. ) ## 12389.3. When there exists a restriction in a stock certificate requiring the consent of the department prior to the transfer of the stock, the request for consent to transfer shall be submitted to the department for approval. Requests for consent to transfer stock certificates representing less than 10 percent of the outstanding stock of the company to existing stockholders, the company which issued the stock, or persons who have been employed by the underwritten title company for the preceding 12 months, shall be approved or denied by the department within 60 days of the request for consent to transfer. If no action is taken by the department within 60 days, the request for consent to transfer stock certificates shall be deemed approved. In no event may the 60-day period be extended or waived by the applicant or the department. The time limits set forth in this section shall not apply where the transfer of the stock would result in the transferee, other than the company which issued the stock, owning 10 percent or more of the outstanding stock of the company. (Added by Stats. 1992, Ch. 991, Sec. 2. Effective January 1, 1993.)
  132. 12389.4.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. )

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    Underwritten title companies must file quarterly financial statements with the commissioner, and the commissioner may require extra financial information.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. ) ## 12389.4. An underwritten title company shall furnish a quarterly financial statement to the commissioner on forms prescribed by the commissioner on or before 30 days after each calendar quarter ending March 31, June 30, and September 30. Underwritten title companies that are specifically approved to report on a fiscal year basis shall file a quarterly financial statement 30 days after the end of each fiscal quarter. The commissioner is authorized to require an underwritten title company to provide supplemental accounting and financial information when the commissioner deems it to be necessary. (Added by Stats. 1992, Ch. 991, Sec. 3. Effective January 1, 1993.)
  133. 12389.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. )

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    People who prepare title searches, title examinations, title reports, or certificates of abstracts of title for policies written by a title insurer must be licensed as an underwritten title company.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. ) ## 12389.5. Every person engaged in the business of preparing title searches, title examinations, title reports, and certificates of abstracts of title, upon which a title insurer writes title policies, is required to be licensed as an underwritten title company in compliance with the licensing requirements of this article. (Added by Stats. 1995, Ch. 433, Sec. 2. Effective January 1, 1996.)
  134. 12389.6.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. )

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    Before disbursing escrow funds, an underwritten title company must use one approved protection procedure in its underwriting agreement, and the commissioner must act on submitted procedures within 60 days.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. ) ## 12389.6. (a) Prior to the disbursement by an underwritten title company from any escrow account under Section 12413.1, each underwriting agreement between the underwritten title company and a title insurer shall contain one of the following written procedures reasonably calculated to prevent the misappropriation, disappearance, or wrongful use of funds deposited in the underwritten title company’s escrow or subescrow account: (1) The underwritten title company shall obtain and maintain a fidelity bond or insurance policy, satisfactory to the title insurer agreeing to this option that covers losses caused by misappropriation, disappearance, or other wrongful use of escrow funds deposited with the underwritten title company. The face amount of the fidelity bond or insurance policy shall be at least 10 times the underwritten title company’s required minimum net worth under subdivision (a) of Section 12389. The bond or insurance policy shall name as an additional insured, co-insured, or joint-loss payee each of the title insurers agreeing to this option in the underwriting agreement. The bond or policy may not exclude coverage due to acts or omissions of any officer, director, employee, or principal of the underwritten title company. In the event of cancellation or nonrenewal of the bond or policy, a title insurance company named as an additional insured, co-insured, or joint-loss payee shall be given advance written notice by the underwriter of the bond or policy. The underwritten title company shall submit a copy of the bond or policy to the title insurer named as an additional insured, co-insured, or joint-loss payee within 14 days of the effective date of the underwriting agreement. (2) Disbursements of escrow funds shall be reviewed and approved by an employee of the title insurer. Title insurer employees who review and approve disbursements of escrow funds shall be physically located at the place of business of the underwritten title company and shall be on the title insurer’s payroll. Before review and approval of any disbursement, the employee shall sign an affidavit to be filed with and on a form approved by the commissioner. The affiant shall attest that the affiant has read, is familiar with, and agrees to comply with the title insurer’s approval procedures for disbursements. (3) Account review processes and oversight and internal control guidelines, in electronic or other medium, drafted by a title insurance industry advisory organization, as defined in Section 12340.8, and approved by the commissioner. (4) Written procedures approved by the commissioner that provide for the protection and control of escrow funds in a manner consistent with the purposes of this subdivision. (b) The commissioner shall approve or deny any written procedures submitted to him or her under this section for approval within 60 days of receiving the request. If no action is taken by the commissioner within the 60-day period, the request is deemed approved. (Added by Stats. 1995, Ch. 408, Sec. 2. Effective January 1, 1996.)
  135. 12389.7.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. )

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    This section makes specified Insurance Code sections apply to underwritten title companies and defines certain terms for that purpose.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3.7. Underwritten Title Companies [12389 - 12389.7] ( Article 3.7 added by Stats. 1973, Ch. 1130. ) ## 12389.7. (a) Sections 1070, 1070.5, 1070.6, 1071.5, 1072, and 1076 shall be applicable to underwritten title companies. (b) The following terms from Sections 1070, 1070.5, 1070.6, 1071.5, 1072, and 1076 shall be applicable to underwritten title companies as follows: (1) “Certificate of Authority” shall mean an underwritten title company license. (2) “Insurer” shall mean an underwritten title company. (3) “Reinsurer” shall mean a title underwriter or another underwritten title company. (c) For the purposes of this section, Sections 1070, 1070.5, 1070.6, 1071.5, 1072, and 1076 shall be construed in accordance with the nature of underwritten title companies and the business of title insurance. (Added by Stats. 2013, Ch. 321, Sec. 26. (AB 1391) Effective January 1, 2014.)
  136. 1239.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

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    For policy loan interest rates, no other law applies unless it is specifically made applicable.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1239. No other provision of law shall apply to policy loan interest rates unless made specifically applicable to these rates. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  137. 1239.5.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. )

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    This article does not apply to insurance contracts issued before its effective date unless the policyholder agrees in writing.

    ## 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 5.5. Life Insurance Policy Loans [1230 - 1239.5] ( Article 5.5 added by Stats. 1982, Ch. 1351, Sec. 3. ) ## 1239.5. The provisions of this article shall not apply to any insurance contract issued before the effective date of this article unless the policyholder agrees in writing to the applicability of these provisions. (Added by Stats. 1982, Ch. 1351, Sec. 3.)
  138. 12390.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. General Powers [12390 - 12394] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A domestic title insurer may issue title policies and may insure several specified interests related to notes, mortgages, and evidences of indebtedness.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. General Powers [12390 - 12394] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 12390. Every domestic title insurer may issue title policies and may also insure: (a) The identity, due execution, and validity of any note or bond secured by mortgage. (b) The identity, due execution, validity and recording of any such mortgage. (c) The identity, due execution and validity of evidences of indebtedness issued by this State, or by any political subdivision or district therein, or by any private or public corporation. (Enacted by Stats. 1935, Ch. 145.)
  139. 12391.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. General Powers [12390 - 12394] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    This section lets the insurer act as a registrar or transfer agent, and transfer or countersign certain indebtedness and stock certificates.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. General Powers [12390 - 12394] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 12391. Such insurer also may: (a) Act as registrar or transfer agent of this State, or of any political subdivision or district therein, or of any private or public corporation. (b) Transfer or countersign any evidences of indebtedness which it may insure. (c) Transfer or countersign certificates of stock of any private or public corporation. (Enacted by Stats. 1935, Ch. 145.)
  140. 12394.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. General Powers [12390 - 12394] ( Article 4 enacted by Stats. 1935, Ch. 145. )

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    A title insurer must follow insurance laws and the commissioner’s rules for its title insurance department, and it may invest those department assets and related accumulations as state law allows.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4. General Powers [12390 - 12394] ( Article 4 enacted by Stats. 1935, Ch. 145. ) ## 12394. A title insurer, as to its title insurance department, shall be subject to and shall comply with all the requirements of the insurance laws and the rules and regulations of the commissioner. It may invest its assets apportioned to its title insurance department, and the accumulations therefrom, in the manner in which the assets of title insurers are allowed by the laws of this state to be invested. (Amended by Stats. 1999, Ch. 187, Sec. 2. Effective January 1, 2000.)
  141. 12396.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. )

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    This section defines key terms used in the article, including “controlled business source,” “License,” “Licensee,” and when a title order is treated as coming from a controlled business source.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. ) ## 12396. (a) For purposes of this article, “controlled business source” means an affiliate, as defined in subdivision (a) of Section 1215, of any title insurer, controlled escrow company, or underwritten title company. (b) For purposes of this article: (1) “License” means a securities permit issued to a title insurance entity, a license to operate as an underwritten title company, or a certificate of authority to act as a title insurer. (2) “Licensee” means the holder of a license. (c) For purposes of this article, a title order shall be deemed to emanate from a controlled business source if the controlled business source is acting in the capacity of a principal, lender, representative, or agent of any of the parties to the transaction, or any other person or entity with which the reporting entity has an agreement, written or otherwise, whereby title orders are traded or otherwise exchanged in order to achieve compliance with this article. (Added by Stats. 1989, Ch. 344, Sec. 1.)
  142. 12397.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. )

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    License applicants must say they intend to actively compete in title insurance in each county where they will do business, and they must show their business plan will not depend on controlled business sources for more than 50 percent of closed title orders.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. ) ## 12397. Any applicant for a license shall indicate the applicant’s intent to actively compete in the marketplace for title insurance in each county in which the applicant seeks to or does conduct the business of title insurance. The failure to so indicate shall constitute grounds for denial of the license. Each applicant for a license shall also demonstrate that its plan of operation and intended course of business conduct will not involve reliance for more than 50 percent of its closed title orders from controlled business sources. (Added by Stats. 1989, Ch. 344, Sec. 1.)
  143. 12397.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. )

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    Licensees must submit required information to the Department of Insurance, keep title-order records, and file annual verified reports; title insurers with underwriting agreements must also file a verified statement after receiving the report.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. ) ## 12397.5. (a) Each licensee shall make submissions as are required by the Department of Insurance to enable the department to determine the nature and extent of the licensee’s efforts to actively compete in each county in which it transacts its business. The licensee shall maintain records of its title orders sufficient to indicate the source of the title orders. (b) Competitive behavior shall be measured by the source of closed title orders in each county in which the licensee engages in the title business and by the entity’s progress toward meeting the 50 percent objective specified in Section 12397, as indicated in the annual, verified report filed pursuant to subdivision (c). (c) Within 90 days following the end of each business year, as established by the licensee, each licensee shall file with the commissioner, and any title insurer with which the licensee maintains an underwriting agreement, a verified report executed by the licensee’s chief executive officer or his or her designee under penalty of perjury, stating the percent of closed title orders for each county originating from controlled and noncontrolled business sources. Each title insurer that maintains an underwriting agreement with another licensee shall, within 30 days after receipt of this report, file with the commissioner a verified statement, signed by the licensee’s chief executive officer or by his or her designee under penalty of perjury, that the report is substantially correct or that insufficient information is contained in the report to enable an opinion to be formed concerning the correctness of the report. (d) Upon receipt by the department of a verified statement, signed under penalty of perjury, that less than 5 percent of the business a licensee transacts emanates from controlled business sources, the licensee shall be relieved of further reporting under this article, but shall be subject to reporting under subdivision (c) at any time that 5 percent or more of the business which the licensee transacts emanates from controlled business sources. (Added by Stats. 1989, Ch. 344, Sec. 1.)
  144. 12398.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. )

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    If an applicant or licensee fails to comply with this article, the application may be denied, or an issued license may be suspended or revoked, and the commissioner may impose other disciplinary action.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. ) ## 12398. The failure of an applicant or licensee to comply with any of the requirements of this article shall be grounds for the denial of an application for a license, the suspension or revocation of an issued license, or other disciplinary action determined by the commissioner, in accordance with procedures prescribed by law therefor. (Added by Stats. 1989, Ch. 344, Sec. 1.)
  145. 12399.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. )

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    This section says the article does not limit or block consideration or approval of a license application, unless the article expressly says otherwise.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 4.5. Business Plans [12396 - 12399] ( Article 4.5 added by Stats. 1989, Ch. 344, Sec. 1. ) ## 12399. Nothing in this article shall limit or preclude the consideration or approval of an application for a license, except as expressly provided in this article. (Added by Stats. 1989, Ch. 344, Sec. 1.)
  146. 124.

    ## 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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    “Financial guaranty insurance” is insurance as defined by Section 12100.

    ## 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. ) ## 124. “Financial guaranty insurance” means that insurance as defined by Section 12100. (Added by Stats. 1990, Ch. 1032, Sec. 3.)
  147. 124.5.

    ## 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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    “Homeowners’ insurance” is defined as insurance covering the risks described in Section 675(a).

    ## 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. ) ## 124.5. “Homeowners’ insurance” means insurance covering the risks described in subdivision (a) of Section 675. (Added by Stats. 2005, Ch. 447, Sec. 1. Effective January 1, 2006.)
  148. 1240.

    ## 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 6. Foreign Investments [1240 - 1242] ( Article 6 enacted by Stats. 1935, Ch. 145. )

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    This section defines several terms used for foreign investments in the Insurance Code.

    ## 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 6. Foreign Investments [1240 - 1242] ( Article 6 enacted by Stats. 1935, Ch. 145. ) ## 1240. The following definitions shall apply in this article: (a) “Foreign currency” means a currency other than that of the United States. (b) “Foreign investment” means an investment in a foreign jurisdiction, or an investment in a person, real estate, or asset domiciled in a foreign jurisdiction, that is substantially of the same kind, class, and investment grade as those eligible for investment under this code, other than under Section 1210 or 1241. An investment shall not be a foreign investment if the issuing person, qualified primary credit source, or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction, unless both of the following apply: (1) The issuing person is a shell business entity. (2) The investment is not assumed, accepted, guaranteed, or insured or otherwise backed by a domestic jurisdiction or a person, that is not a shell business entity, domiciled in a domestic jurisdiction. (c) For purposes of subdivision (b), the following definitions apply: (1) “Shell business entity” means a business entity having no economic substance, except as a vehicle for owning interests in assets issued, owned, or previously owned by a person domiciled in a foreign jurisdiction. (2) “Qualified guarantor” means a guarantor against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction. (3) “Qualified primary credit source” means the credit source to which an insurer looks for payment as to an investment and against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction. (d) “Foreign jurisdiction” means a jurisdiction other than the United States or any of its political subdivisions. (Repealed and added by Stats. 2008, Ch. 129, Sec. 3. Effective January 1, 2009.)
  149. 12400.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Exemptions [12400 - 12400.5] ( Article 5 enacted by Stats. 1935, Ch. 145. )

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    Title insurers are exempt from the listed provisions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Exemptions [12400 - 12400.5] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 12400. The provisions of subdivision (f) of Section 381, and the provisions of Sections 382, 383, 383.5, 386, 481, 750, 751, 752, 755, 755.5, 756, 757, 758, 759, 760, 760.5, 763, 763.5, 766, 800, 801, 802, 803, and 804, shall not apply to title insurers. (Amended by Stats. 1976, Ch. 1152.)
  150. 12400.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Exemptions [12400 - 12400.5] ( Article 5 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    Article 5.6 does not apply to title insurers.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Exemptions [12400 - 12400.5] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 12400.1. Article 5.6 (commencing with Section 1875.20) of Chapter 12 of Part 2 of Division 1 does not apply to title insurers. (Added by Stats. 1994, Ch. 131, Sec. 1. Effective January 1, 1995.)
  151. 12400.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Exemptions [12400 - 12400.5] ( Article 5 enacted by Stats. 1935, Ch. 145. )

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    A title insurance company or underwritten title company is exempt from being treated as having participated in prohibited acts just because it conducts authorized title insurance business.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5. Exemptions [12400 - 12400.5] ( Article 5 enacted by Stats. 1935, Ch. 145. ) ## 12400.5. A title insurance company or underwritten title company engaged in the business of title insurance, as defined in Section 12340.3, shall not be deemed to have participated in any acts prohibited by Division 1 (commencing with Section 25000) of Title 4 of the Corporations Code solely by reason of engaging in the business of title insurance as authorized pursuant to this chapter. (Added by Stats. 1993, Ch. 314, Sec. 1. Effective January 1, 1994.)
  152. 12401.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    This section says title insurance rates must be regulated to protect the public, so they are not excessive, inadequate, or unfairly discriminatory.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401. The purpose of this article is to promote the public welfare by regulating rates for the business of title insurance as herein provided to the end that they shall not be excessive, inadequate or unfairly discriminatory. It is the express intent of this article to permit and encourage competition between persons or entities engaged in the business of title insurance on a sound financial basis, and nothing in this article is intended to give the commissioner power to fix and determine a rate level by classification or otherwise. (Repealed and added by Stats. 1973, Ch. 1130.)
  153. 12401.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    Title insurers, underwritten title companies, and controlled escrow companies must file rate schedules, title policy forms, and modifications with the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.1. Every title insurer, underwritten title company, and controlled escrow company shall file with the commissioner its schedules of rates, all regularly issued forms of title policies to which such rates apply, and every modification thereof which it proposes to use in this state. Every schedule of rates filed by a title insurer shall set forth the entire charge to the public for each type of title policy included within such schedule and shall include without separate statement thereof that portion of the charge, if any, which is based upon work performed by an underwritten title company; there shall be no separate filing by an underwritten title company for such work. Every filing shall set forth its effective date, which shall be not earlier than the 30th day following its receipt by the commissioner, and shall indicate the character and extent of the coverages and services contemplated. (Added by Stats. 1973, Ch. 1130.)
  154. 12401.10.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    Title insurers are not required to file rates for reinsurance contracts or agreements, or for policies of excess coinsurance.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.10. Nothing in this article shall require the filing of rates by title insurers for reinsurance contracts or agreements or policies of excess coinsurance. (Added by Stats. 1973, Ch. 1130.)
  155. 12401.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    Title insurers, underwritten title companies, and controlled escrow companies must establish basic classifications of coverages and services for use in setting rates.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.2. Every title insurer, underwritten title company and controlled escrow company shall establish basic classifications of coverages and services to be used as the basis for determining rates. (Added by Stats. 1973, Ch. 1130.)
  156. 12401.3.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    This section sets pricing standards for title insurance rates and allows certain expense and classification differences when tied to specified factors.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.3. The following standards shall apply to the making and use of rates pertaining to all the business of title insurance to which the provisions of this article are applicable: (a) Rates shall not be excessive or inadequate, as herein defined, nor shall they be unfairly discriminatory. No rate shall be held excessive unless (1) the rate is unreasonably high for the insurance or other services provided, and (2) a reasonable degree of competition does not exist in the particular phase of the business of title insurance to which the rate is applicable. No rate shall be held to be inadequate unless (1) the rate is unreasonably low for the insurance or other services provided and (2) the continued use of the rate endangers the solvency of the person or entity using it, or unless (3) the rate is unreasonably low for the insurance or other services provided and the use of the rate by the person or entity using it has, or if continued will have, the effect of destroying competition or creating a monopoly. However, no rate or rate classification shall be held to be inadequate for the reason that a rate within a rating classification is less than the cost of the risk and expense elements assigned to smaller insurances within that classification, and the excess of the costs may be charged against larger insurances within the classification without rendering the rate or rate classification unfairly discriminatory. (b) Consideration shall be given, to the extent applicable, to past and prospective loss experience within and outside this state, to a reasonable margin for profit and contingencies, to past and prospective expenses both countrywide and those specially applicable to this state, and to all other factors, including judgment factors, deemed relevant within and outside this state. (c) The systems of expense provisions included in the rates for use by any title insurer, underwritten title company, or controlled escrow company may differ from those of other title insurers, underwritten title companies, or controlled escrow companies to reflect the operating methods of the person or entity with respect to any kind of insurance, or other service, or with respect to any combination thereof. (d) For the establishment of rates, risks, and services in the business of title insurance may be grouped by classifications into the various types of title policies or services offered. The classifications may be further divided to produce rates for individual risks or services within a classification. Those classifications or further divisions thereof may be established based upon any one or more of the following: (1) the size of a transaction and its effect upon the continuing solvency of the person or entity using the rate in question if a loss should occur; (2) expense elements, including the management time that would ordinarily be expended in a typical transaction of a particular size; (3) the geographic location of a transaction, including variations in risk and expense elements attributable thereto; (4) the individual experience of the person or entity using the rate in question; and (5) any other reasonable considerations. Those classifications or further divisions thereof shall apply to all risks and services in the business of title insurance under the same or under substantially the same circumstances or conditions. (Amended by Stats. 1981, Ch. 714, Sec. 311.)
  157. 12401.4.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    Certain title-insurance-related actors may exchange information and experience data, and may consult with insurance supervisory officials and rating organizations in other states, to support uniform administration of rate regulatory laws.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.4. In order to further uniform administration of rate regulatory laws, the commissioner and every person or entity in the business of title insurance and every advisory organization in this state may exchange information and experience data with insurance supervisory officials of this and other states and rating organizations in other states and may consult with them with respect to such information and data. (Added by Stats. 1973, Ch. 1130.)
  158. 12401.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    The commissioner may set rules for title insurance data reporting, and licensed title insurers must report data directly to the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.5. As a further aid to uniform administration of rate regulatory laws of this state, the commissioner may prescribe by reasonable rules and regulations: (a) For the annual reporting of financial data relating to the aggregate economic performance of all title insurance entities conducting the business of title insurance in this state. That data, if required, shall be for the purpose of determining the industry financial experience for the reporting year and shall reflect the after-tax rate of return on total capital, including investment income and realized and unrealized capital gains, from whatever source attributable to operations in this state. (b) A statistical plan, reasonably adapted to each of the rating systems in use within the state. Any plan may be modified from time to time by the commissioner and shall be used thereafter by each title insurer in the reporting of data required by the plan, so that the experience of all title insurers is available to the commissioner on an annual basis. The commissioner, through regulations, shall prescribe the form and detail of the financial data to be submitted and the time period the data shall cover. In promulgating the plan, the commissioner may give due consideration to the rating systems in use and, in order that the plan may be as uniform as is practicable among the several states, to the rules and to the form of the plan used for these rating systems in other states. Every licensed title insurer in the state shall be required to record and report data directly to the commissioner. The commissioner shall designate one or more advisory organizations to assist in the development of the statistical plan and to further assist in gathering data and making compilations thereof, and these compilations shall be made available, subject to reasonable rules adopted by the commissioner, to title insurers and advisory organizations. (c) No statistical plan or modifications thereto, or rules or regulations pertaining thereto, shall be adopted or implemented absent compliance with the provisions of Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code, except that any plan, rule, or regulation shall not become effective for a period of 120 days following its adoption, and any plan, rule, or regulation shall be deemed to be a regulation required to be filed with the Secretary of State for purposes of Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code. (d) Data gathered under the statistical plan may be used in conjunction with analytical input from an industry advisory organization to generate statistical information for use in reviewing and evaluating individual rate filings by title insurers pursuant to the standards set forth in Section 12401.3. However, no statistical plan or modifications thereto, or rules or regulations pertaining thereto, shall do any of the following: (1) Serve as the basis for an assessment not otherwise authorized by law. (2) Conflict with the purpose and express intent of Section 12401. (3) Fix, determine, or in any way impair competitive rating or the free market. (e) This section shall not require a title insurer to refile an existing rate. However, this section shall apply to the filing of a changed or otherwise modified rate, pursuant to the regulations adopted to implement this chapter. (Amended by Stats. 1998, Ch. 919, Sec. 1. Effective January 1, 1999.)
  159. 12401.6.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    This section says the article should not be read to forbid concerted action by entities under the same general management and control.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.6. Nothing in this article shall be construed to prohibit concert of action between entities under the same general management and control. (Added by Stats. 1973, Ch. 1130.)
  160. 12401.7.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    A title insurer, underwritten title company, or controlled escrow company may not use a title insurance rate before it is effective or before the rate filing has been publicly displayed for at least 30 days in each office in the county where the rate applies.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.7. No title insurer, underwritten title company or controlled escrow company shall use any rate in the business of title insurance prior to its effective date nor prior to the filing with respect to such rate having been publicly displayed and made readily available to the public for a period of no less than 30 days in each office of the title insurer, underwritten title company, or controlled escrow company in the county to which such rate applies, and no rate increase shall apply to title policies or services which have been contracted for prior to such effective date. (Added by Stats. 1973, Ch. 1130.)
  161. 12401.71.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    A title insurer, underwritten title company, or controlled escrow company may use a reduced new rate before 30 days after filing if specified conditions are met, and the commissioner has authority over the reduction.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.71. (a) Notwithstanding Sections 12401.1 and 12401.7, a title insurer, underwritten title company, or controlled escrow company may use a new rate prior to 30 days after the filing if the new rate results in a reduction from an existing rate, the earlier effective date is set forth in the filing, and the new rate has been publicly displayed and made readily available to the public prior to its effective date. (b) Any rate reduction filed by a title insurer, underwritten title company, or controlled escrow company pursuant to subdivision (a) shall be subject to the authority of the commissioner as set forth in this article and Article 6.7 (commencing with Section 12414.13). (c) Five years from the effective date of this section, and within existing resources, the department shall review the reduced rates authorized by this section to determine if they are inadequate or if they increase the possibility of title insurers becoming insolvent. This review shall be in addition to any other authorized by statute. (Added by Stats. 2003, Ch. 440, Sec. 1. Effective January 1, 2004.)
  162. 12401.8.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    Charges above an effective rate filing are allowed if the filing says they may be charged for unusual insurance risks or unusual services, the charges are reasonably related to the risk or service cost, and each payer consents in writing in advance.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.8. Charges in excess of those set forth in a rate filing which has become effective may be made when such filing includes a statement that such charges may be made in the event unusual insurance risks are assumed or unusual services performed in the transaction of the business of title insurance; provided, that such charges are reasonably commensurate with the risks assumed or the costs of the services performed and provided further that each person or entity obligated to pay all or any part of such charges consents thereto in writing in advance. (Added by Stats. 1973, Ch. 1130.)
  163. 12401.9.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. )

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    Rate schedules must be printed in at least 10-point type, kept available to the public while effective, displayed in each relevant office, and provided to the public on request.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.5. Rate Filing and Regulation [12401 - 12401.10] ( Article 5.5 added by Stats. 1973, Ch. 1130. ) ## 12401.9. The schedules of rates which are required to be filed with the commissioner under the provisions of Section 12401.1 shall be printed or typed in type not smaller than 10-point and, so long as they are effective, full copies thereof, showing their effective date or dates, shall be kept at all times available to the public and prominently displayed in a public place in each office of a title insurer, an underwritten title company and a controlled escrow company in the county to which such rates apply. On request, copies of such schedules or adequate summaries of the pertinent part or parts thereof shall be furnished to the public. (Added by Stats. 1973, Ch. 1130.)
  164. 12402.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.7. Advisory Organizations [12402 - 12402.2] ( Article 5.7 added by Stats. 1973, Ch. 1130. )

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    An advisory organization may not operate in this state unless it first files specified organizational documents and contact information with the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.7. Advisory Organizations [12402 - 12402.2] ( Article 5.7 added by Stats. 1973, Ch. 1130. ) ## 12402. No advisory organization shall conduct its operations in this state without first filing with the commissioner: (a) a copy of its constitution, articles of agreement or association or certificate of incorporation, and of its bylaws, rules, and regulations governing the conduct of its business; (b) a list of its members; (c) the name and address of a resident of this state upon whom notices or orders of the commissioner or process affecting such advisory organization may be served. (Repealed and added by Stats. 1973, Ch. 1130.)
  165. 12402.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.7. Advisory Organizations [12402 - 12402.2] ( Article 5.7 added by Stats. 1973, Ch. 1130. )

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    Advisory organizations must adopt bylaws or rules that allow membership on reasonable, nondiscriminatory terms, allow withdrawal on written notice, prohibit restraints on lawful title insurance business, and require prompt notice to the commissioner of certain changes.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.7. Advisory Organizations [12402 - 12402.2] ( Article 5.7 added by Stats. 1973, Ch. 1130. ) ## 12402.1. Every advisory organization shall adopt bylaws or rules and regulations which will: (a) Permit any person or entity in the business of title insurance in this state to become a member at a reasonable cost and without discrimination; (b) Permit any member to withdraw at any time upon written notice; (c) Prohibit any act or agreement by which any person or entity is restrained from lawfully engaging in the business of title insurance in this state; (d) Require that the commissioner be given prompt notification of every change in any of the items described in subdivisions (a), (b), and (c) of Section 12402. (Added by Stats. 1973, Ch. 1130.)
  166. 12402.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.7. Advisory Organizations [12402 - 12402.2] ( Article 5.7 added by Stats. 1973, Ch. 1130. )

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    A bylaw, rule, or regulation required by Section 12402.1 is not effective until it is filed with the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 5.7. Advisory Organizations [12402 - 12402.2] ( Article 5.7 added by Stats. 1973, Ch. 1130. ) ## 12402.2. No bylaw or rule or regulation required by Section 12402.1 shall be effective until filed with the commissioner. (Added by Stats. 1973, Ch. 1130.)
  167. 12404.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Title insurers, underwritten title companies, and controlled escrow companies must not pay commissions or other consideration to induce the placement or referral of title business.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12404. (a) It is unlawful for any title insurer, underwritten title company or controlled escrow company to pay, directly or indirectly, any commission, compensation, or other consideration to any person as an inducement for the placement or referral of title business. Actual placement or referral of title business is not a precondition to a violation of this section, whether the violation is or is not a per se violation pursuant to subdivision (c). (b) For purposes of this section, the following definitions are applicable: (1) “Compensating balance” is a balance maintained in a lending institution by any title insurer, underwritten title company, or controlled escrow company for the express or implied purpose of influencing the extension of credit to a third party or the provision of goods, services, or benefits to a third party as an inducement for the placement or referral of title business by a third party. (2) “Person” means any individual or entity who is any owner or prospective owner, lessee or prospective lessee of real property or any interest therein, any obligee or prospective obligee of an obligation secured or to be secured either in whole or in part by real property or any interest therein, or any person who is acting or who is in the business of acting as agent, representative, attorney, or employee of those persons. (3) “Title business” means the “business of title insurance” as defined in Section 12340.3, and includes, but is not limited to, the offering of title insurance, escrow, or other services by a title insurer, underwritten title company, or controlled escrow company. (c) The following activities, whether performed directly or indirectly, are deemed per se inducements for the placement or referral of title insurance business by any person and are unlawful: (1) Paying or offering to pay, furnishing or offering to furnish, or providing or offering to provide assistance with the business expenses of any person, including, but not limited to, rent, employee salaries, furniture, copiers, facsimile machines, automobiles, telephone services or equipment, or computers. (2) Providing or offering to provide any form of consideration intended for the benefit of any person, including cash, below market rate loans, automobile charges, or merchandise or merchandise credits. (3) Placing or offering to place on behalf of any person, compensating balances. (4) Advancing or paying or offering to advance or pay money on behalf of any person into an escrow to facilitate the closing thereof, other than any sum which represents the proceeds of a loan made in the ordinary course of business; or an advance not to exceed 2 percent of the sales price of the real property being sold or exchanged through the escrow or the amount of any loan secured by real property involved in the escrow, whichever is greater; or the extension of credit or an advance for the costs, fees and expenses of the escrow or of the title insurance issued or to be issued in connection therewith. (5) Disbursing or offering to disburse on behalf of any person escrow funds held by a title insurer, underwritten title company or controlled escrow company before the conditions of the escrow applicable to that disbursement have been met, or in a manner which does not conform to Section 12413.1, including disbursing or offering to disburse before the expiration of the appropriate period established in Section 12413.1. (6) Furnishing or offering to furnish all or any part of the time or productive effort of any employee of the title insurer, underwritten title company, or controlled escrow company to any person for any service unrelated to the title business. (7) Advertising or paying for the advertising in any newspaper, newsletter, magazine, or publication that is produced by, or on behalf of, a person, or that results in a direct, or indirect, subsidy to a person. (8) Expenditures for food, beverages, and entertainment for a person. (d) Expenditures for the following are not deemed to be unlawful or in violation of this section: (1) Promotional items with a permanently affixed company logo of the underwritten title company, title insurer, or controlled escrow company, with a value of not more than ten dollars ($10) each. “Promotional item” does not include a gift certificate, gift card, or other item that has a specific monetary value on its face, or that may be exchanged for any other item having a specific monetary value. (2) Furnishing education or educational materials exclusively related to the business of title insurance for a person if continuing education credits are not provided. (3) Other expenditures for a person, as permitted by the Department of Insurance by regulation. (e) The provision or payment of any form of consideration as an inducement for the placement or referral of title business not specifically set forth in this section shall not be presumed lawful merely because they are not specifically prohibited. (f) The Insurance Commissioner may determine compliance and enforce the provisions of this section by written order, regulation or written consent which may take into consideration standards, conditions, guidelines, principles, or definitions utilized by other states or federal agencies but those standards, conditions, guidelines, principles, or definitions shall not be determinative. (g) It is the intent of the Legislature that the enactment of this section shall have no effect on the applicability of other sections of the Insurance Code that are in existence prior to the enactment of this section and which specifically, or by implication, refer to this section. The Legislature hereby intends that this section, including the specific terms employed within it, shall be liberally construed for the purpose of protecting consumers of title business. (Amended by Stats. 2008, Ch. 280, Sec. 1. Effective January 1, 2009.)
  168. 12404.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Title insurers, controlled escrow companies, and underwritten title companies may not provide a preliminary report for free, must charge a reasonable fee tied to production cost and at least the listed minimum rate, and must promptly try to collect after billing.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12404.1. The furnishing of a preliminary report by any title insurer, controlled escrow company or underwritten title company, without charge to any person, shall constitute a violation of Section 12404. The charge for a preliminary report shall have a reasonable relation to the cost of production of the report but in no event shall it be less than the rate for a standard owners policy, minimum liability, as set forth in the company’s rate schedule. After billing any person for a preliminary report the title insurer, controlled escrow company or underwritten title company shall promptly make a good faith attempt to collect; provided, however, that notwithstanding Section 12404, but without limiting the applicability of that section to other transactions, this charge may be waived or canceled, if the company follows uniform practices as to all customers under like circumstances. (a) After the issuance of the preliminary report, but before the charge is waived or canceled, the files of the issuing company contain a copy of a bona fide sales or exchange agreement, or loan commitment executed by the party or parties in interest relating to the property described in the report, and the sale, exchange, or loan is not consummated. (b) When the preliminary report so furnished contains a lien or encumbrance or other title defect which the issuing company has refused to eliminate from its policy of title insurance or to provide insurance against loss by reason thereof, and another title insurance company has eliminated the lien or encumbrance or other title defect from its policy of title insurance or provided insurance against loss resulting therefrom within a reasonable period of time from the date of the issuance of the preliminary report. The furnishing of the names of owners of record, descriptions of real property, and property characteristics, as defined in Section 408.3 of the Revenue and Taxation Code, shall not be deemed to be a violation of Section 12404, whether provided on individual or multiple properties and whether provided in printed form or by electronic media. (Amended by Stats. 1992, Ch. 551, Sec. 1. Effective January 1, 1993.)
  169. 12404.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    This section defines “personal or controlled insurance,” says any excess annual fees and charges from that kind of insurance are an unlawful rebate, and states that a title insurer violating this section is not subject to the penalty in Section 12409.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12404.5. As used in this section “personal or controlled insurance” means a policy of title insurance, or insurance as to the identity, due execution and validity of any note or bond secured by mortage, or the identity, due execution, validity and recording of any such mortgage, or any other service afforded by title insurers the rate for which is required to be filed by Article 5.5 (commencing with Section 12401) of this chapter, where the insured or one of the insured under such policy is, or the loss thereunder is payable to, an underwritten title company, a controlled escrow company, or an issuing agent, or (a) If such underwritten or controlled company or issuing agent is a natural person: (1) his spouse, his employer or his employer’s spouse, or (2) any person related to him or the persons mentioned in (1) of this paragraph within the second degree by blood or marriage, or (3) if his employer is a corporation, any person directly or indirectly owning or controlling a majority of the voting stock or controlling interest in such corporation, or (4) if his employer is a partnership or association, any person owning any interest in such partnership or association. (b) If such underwritten or controlled company or issuing agent is a corporation: (1) any person directly or indirectly owning or controlling a majority of the voting stock or controlling interest in such corporation, or (2) any corporation which is directly or indirectly controlled by a person who also controls the underwritten title company, controlled escrow company, or issuing agent, as described in (1), or (3) any corporation making consolidated returns for United States income tax purposes with any corporation described in (1) or (2) of this paragraph. If the fees and charges for personal or controlled insurance so issued in any one calendar year received by an underwritten title company, a controlled escrow company or an issuing agent exceed the fees and charges received for other title insurance issued at the instance or request of such underwritten title company, controlled escrow company or issuing agent in the same year, the excess is an unlawful rebate. Violation of this section by a title insurer shall not be subject to the penalty provided for in Section 12409. (Amended by Stats. 1973, Ch. 1130.)
  170. 12405.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Title insurers, controlled escrow companies, and underwritten title companies must not give rebates or charge below the applicable fee schedule for title policies, except for permitted bulk or special rates in the schedule.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12405. No title insurer, no controlled escrow company, and no underwritten title company shall make any rebate of any portion of the fee or charge shown by the schedule required by Section 12401.1. No title insurer, no controlled escrow company and no underwritten title company shall quote any fee or make any charge for a title policy to any person which is less than that currently available to others for the same type of title policy in a like amount covering property in the same county and involving the same factors as set forth in its then currently effective schedule of fees and charges. The amount by which any fee or charge is less than that called for by the then currently effective schedule of fees and charges of the title insurer is an unlawful rebate; provided, that nothing contained in this article shall prohibit bulk rates or special rates for customers of prescribed classes if such bulk or special rates are provided for in such schedule. (Amended by Stats. 1976, Ch. 1079.)
  171. 12405.7.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Certain title-related businesses must not pay for or provide a customer’s advertising or promotional materials, and must not pay for outside evidence-of-title materials for a current real property transaction except as allowed by Section 12412.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12405.7. In addition to other acts prohibited by this article, no controlled escrow company or title insurer or other person engaged in the business of selling or furnishing to the public, directly or indirectly, evidence to title to real property shall: (a) Pay for or furnish or offer to pay for or furnish any part of the advertising or promotional material of the customer in connection with the sale or encumbrance of real property. (b) Pay or offer to pay for any evidence of title or copy or contents thereof not produced or issued by such person or company if such evidence of title relates to a current real property transaction, except as provided in Section 12412. (Added by Stats. 1965, Ch. 360.)
  172. 12406.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    A title insurer must not issue a title policy for a transaction tied to prohibited commissions or unlawful rebates.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12406. No title insurer shall issue any title policy in any transaction in connection with which it or any person which is a controlled escrow company or underwritten title company by reason of its relationship with such title insurer has paid or contemplates paying any commission in violation of Section 12404 or in connection with which it or any such controlled escrow company or underwritten title company has made or contemplates making any unlawful rebate in violation of Section 12405. (Added by Stats. 1949, Ch. 891.)
  173. 12406.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    The commissioner must create and distribute a consumer brochure about title insurance in residential real estate transactions, and the department must post it online.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12406.5. (a) The commissioner shall develop, publish, and disseminate a brochure for consumers who are required to buy title insurance as part of a residential real estate transaction. The brochure shall inform consumers that competing title insurers and underwritten title companies may offer different costs or services for the title insurance required in the transaction. The brochure shall also inform consumers about the potential availability of discounts in cases involving first-time buyers, short-term rates if a home is resold in less than a five-year period, concurrent rates if the company is providing both the homeowners’ and the lenders’ title insurance policies in the transaction, subdivision bulk rates if the property being purchased is in a new subdivision, refinancing discounts, short-term financing rates, and discounts that may be available in other special cases. The brochure shall encourage consumers to contact more than one title insurer or underwritten title company in order to compare costs and services. (b) The brochure developed pursuant to subdivision (a) shall include the department’s toll-free consumer assistance telephone number and shall invite consumers to call the department if they need assistance. (c) The department shall display the brochure developed pursuant to subdivision (a) on its Internet Web site, and the brochure shall include the department’s Internet address. (d) The brochure developed pursuant to subdivision (a) shall also educate consumers about laws involving unlawful commissions and rebates associated with the placement or referral of title insurance and shall encourage consumers to report to the department, to the Bureau of Real Estate, and to any other appropriate government agencies any suspected incidents of probable unlawful commissions or rebates subject to Article 6.5 (commencing with Section 12414). (e) One copy of the brochure developed pursuant to this section shall be made available to a member of the public at no cost, and the department may charge its actual cost for providing additional copies. The brochure shall be made available for reproduction at no cost to any vendor who wishes to publish the brochure as written, provided any vendor who wishes to publish the brochure agrees to submit any documents containing the brochure to the department prior to publication. (Amended by Stats. 2013, Ch. 352, Sec. 396. (AB 1317) Effective September 26, 2013. Operative July 1, 2013, by Sec. 543 of Ch. 352.)
  174. 12407.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    The commissioner may and must quickly examine the books and records of certain title-related companies when there is reason to believe they violated this article, and examined companies must pay the examination cost on demand.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12407. The commissioner, if he has reason to believe that any controlled escrow company or any underwritten title company has violated or is violating any of the provisions of this article, has the power and it is his duty to forthwith examine its books, records and accounts and in making any such examination he has all the power set forth in Article 4, Chapter 1 of Part 2 of Division 1 of this code and any company so examined shall pay to the commissioner the cost of such examination on demand. Whenever the commissioner examines a title insurer, he shall make such examination of its books, records, and files as may be necessary in his judgment to determine whether or not it has violated or is violating any of the provisions of this article. (Added by Stats. 1949, Ch. 891.)
  175. 12408.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Every title insurer must list certain related escrow or title companies in its annual statement to the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12408. Every title insurer shall include in its annual statement furnished the commissioner pursuant to Article 10 (commencing with Section 900), Chapter 1, Part 2, Division 1 of this code, the name of each person which is a controlled escrow company or underwritten title company by reason of its relationship with such title insurer. (Amended by Stats. 1967, Ch. 689.)
  176. 12408.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    If a title insurer ends an underwriting agreement with an underwritten title company, it must notify the commissioner at the same time.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12408.1. Whenever a title insurer terminates its underwriting agreement with any underwritten title company, it shall at the same time give notice of the termination to the commissioner. (Added by Stats. 1972, Ch. 578.)
  177. 12408.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Title insurers, controlled escrow companies, and underwritten title companies generally may not pay commissions for soliciting or negotiating title insurance business, but they may pay certain commissions or bonuses to full-time salaried employees and must keep records of those payments.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12408.5. (a) Notwithstanding any other provision of this article no title insurer, no controlled escrow company, and no underwritten title company shall pay any commission for the solicitation or negotiation of any services constituting the business of title insurance. (b) The provisions of subdivision (a) notwithstanding, a title insurer, controlled escrow company, or underwritten title company may pay to full-time salaried employees a commission, incentive compensation or bonuses based on any such employees’ level of production of any services constituting the business of title insurance. Any title insurer, controlled escrow company, or underwritten title company and, where applicable their affiliates, which makes such payments shall maintain adequate records detailing the conditions to receipt of any commission, incentive compensation or bonus, the recipient thereof and the amount paid. (c) Any employee of a title insurer, underwritten title company, or controlled escrow company shall not, directly or indirectly, pay or offer to pay, either directly or indirectly, any part of his or her compensation, whether denominated salary, incentive compensation, or bonuses to any person or entity defined in Section 12404, as an inducement for, or as compensation for, any title insurance business or any escrow or other title business, and any payment or offer to pay this consideration is an unlawful rebate. (Added by Stats. 1982, Ch. 972, Sec. 2.)
  178. 12409.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Title insurers, controlled escrow companies, and underwritten title companies that pay commissions or make unlawful rebates in violation of this article can be liable for five times the amount, and the commissioner may restrict or suspend their authority or license after a hearing.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12409. (a) Every title insurer, controlled escrow company, and underwritten title company which pays any commission or which makes any unlawful rebate in violation of this article shall be liable to the people of California for five times the amount of that commission or unlawful rebate, the amount thereof to be recovered by the commissioner pursuant to Section 12976. In addition to, or in lieu of, any other penalty that may be imposed under this code, the commissioner may, after a hearing, issue an order to restrict or suspend the certificate of authority of any title insurer or controlled escrow company or the license of any underwritten title company. The commissioner may restrict or suspend the certificate of authority or license on a statewide basis or in specified counties. (b) In no event shall the total or aggregate amount recovered by the commissioner from a title insurer, controlled escrow company, or underwritten title company pursuant to this section be less than five thousand dollars ($5,000). (Amended by Stats. 1998, Ch. 919, Sec. 2. Effective January 1, 1999.)
  179. 1241.

    ## 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 6. Foreign Investments [1240 - 1242] ( Article 6 enacted by Stats. 1935, Ch. 145. )

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    Domestic insurers may make certain foreign investments and foreign-currency investments, but only within percentage limits and subject to Section 1242 and other listed sections.

    ## 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 6. Foreign Investments [1240 - 1242] ( Article 6 enacted by Stats. 1935, Ch. 145. ) ## 1241. (a) Subject to the limitation in Section 1242, and except for those foreign investments permitted under Section 1192.95, a domestic insurer may acquire foreign investments of substantially the same type as those that an insurer is permitted to acquire pursuant to this code, if, as a result of the acquisition and after giving effect to the investment, both of the following apply: (1) The aggregate amount of foreign investments then held by the insurer does not exceed: (A) Twenty percent of admitted assets, for an insurer with admitted assets equal to or in excess of five hundred million dollars ($500,000,000). (B) Five percent of admitted assets, for an insurer with admitted assets less than five hundred million dollars ($500,000,000). (2) The aggregate amount of foreign investments then held by the insurer in a single foreign jurisdiction does not exceed: (A) Ten percent of admitted assets, for any foreign jurisdiction that has a sovereign debt rating of SVO 1. (B) Three percent of admitted assets, for any foreign jurisdiction that has a sovereign debt rating lower than SVO 1. (b) Subject to the limitations of Section 1242, an insurer may acquire investments denominated in foreign currencies, whether or not they are foreign investments acquired under subdivision (a) of this section, or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction as defined in Section 1211 with respect to investments denominated in a foreign currency, if the following requirements are met: (1) The aggregate amount of investments then held by an insurer under this subdivision denominated in foreign currencies does not exceed: (A) Ten percent of admitted assets, for an insurer described in subparagraph (A) of paragraph (1) of subdivision (a). (B) Three percent of admitted assets, for an insurer described in subparagraph (B) of paragraph (1) of subdivision (a). (2) The aggregate amount of investments then held by an insurer under this subdivision denominated in the foreign currency of a single foreign jurisdiction does not exceed: (A) Ten percent of admitted assets, for an insurer described in subparagraph (A) of paragraph (1) of subdivision (a) for a foreign jurisdiction that has a sovereign debt rating of SVO 1 or 3 percent of admitted assets as to any other foreign jurisdiction. (B) Three percent of admitted assets, for an insurer described in subparagraph (B) of paragraph (1) of subdivision (a). (3) An investment shall not be considered denominated in a foreign currency if the acquiring insurer enters into one or more contracts in transactions permitted under Section 1211 and the business entity counterparty agrees under the contract or contracts to exchange all payments made on the foreign currency denominated investment for United States currency at a rate that effectively insulates the investment cashflows against future changes in currency exchange rates during the period the contract or contracts are in effect. (c) In addition to investments permitted under subdivisions (a) and (b), a domestic insurer that is authorized to do business in a foreign jurisdiction, and that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in the foreign currency of that jurisdiction may acquire foreign investments respecting that jurisdiction, subject to the limitations of Section 1242. However, investments made under this subdivision in obligations of foreign governments, their political subdivisions, and government-sponsored enterprises shall not be subject to the limitations of Section 1242 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer shall not exceed the greater of the following: (1) The amount that the insurer is required by the law of the foreign jurisdiction to invest in the foreign jurisdiction. (2) One hundred fifteen percent of the amount of the insurer’s reserves, net of reinsurance and other obligations under the contracts. (d) In addition to investments permitted under subdivisions (a) and (b), an insurer that is not authorized to do business in a foreign jurisdiction, but that has outstanding insurance, annuity, or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in the foreign currency of that jurisdiction may acquire foreign investments respecting that jurisdiction, and may acquire investments denominated in the currency of that jurisdiction subject to the limitations of Section 1242. However, investments made under this subdivision in obligations of foreign governments, their political subdivisions, and government-sponsored enterprises shall not be subject to the limitations of Section 1242 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer shall not exceed 105 percent of the amount of the insurer’s reserves, net of reinsurance and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction. (e) The investments acquired under this section shall be subject to Sections 1200, 1201, and 1202. (f) Nothing in this section shall in any way restrict or limit Canadian investments otherwise permitted by this code. Canadian investments acquired under other sections of this code shall not be considered foreign investments for purposes of the limitations set forth in this section. (g) Investments made pursuant to Section 1192.9 in investment companies shall be governed by this article to the extent specified in Section 1192.9. (Repealed and added by Stats. 2008, Ch. 129, Sec. 5. Effective January 1, 2009.)
  180. 1241.1.

    ## 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 6. Foreign Investments [1240 - 1242] ( Article 6 enacted by Stats. 1935, Ch. 145. )

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    A domestic insurer may not buy certain investments tied to a foreign jurisdiction if that jurisdiction is designated as a state sponsor of terrorism.

    ## 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 6. Foreign Investments [1240 - 1242] ( Article 6 enacted by Stats. 1935, Ch. 145. ) ## 1241.1. (a) No domestic insurer shall acquire any investment respecting a foreign jurisdiction, or any investment denominated in the currency of that foreign jurisdiction, if that jurisdiction is designated as a state sponsor of terrorism by the United States Secretary of State pursuant to Section 6(j) of the Export Administration Act, Section 40 of the Arms Export Control Act, and Section 620A of the Foreign Assistance Act. (b) If any investment made pursuant to Section 1241 later becomes prohibited by this section, that investment shall not be retained as an investment made pursuant to this code. (Repealed and added by Stats. 2008, Ch. 129, Sec. 7. Effective January 1, 2009.)
  181. 1241.2.

    ## 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 6. Foreign Investments [1240 - 1242] ( Article 6 enacted by Stats. 1935, Ch. 145. )

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    An insurer must determine its investments in listed companies each year and give the department an annual list of those investments.

    ## 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 6. Foreign Investments [1240 - 1242] ( Article 6 enacted by Stats. 1935, Ch. 145. ) ## 1241.2. (a) The Legislature finds and declares all of the following: (1) The federal Securities and Exchange Commission has determined that business activities in foreign states sponsoring terrorism, such as Iran, that are subject to sanctions by the United States may materially harm the share value of foreign companies. Shares in these foreign companies may be held in the portfolio of insurance companies issuing policies to California consumers. (2) Publicly traded companies in the United States are substantially restricted in doing business in or with foreign states, such as Iran, that the United States Department of State has identified as sponsoring terrorism. (3) Identifying companies with business activities in foreign states, such as Iran, that sponsor terrorism and ensuring that those investments are financially sound is an important public policy priority. (4) It is the government of Iran, and not the people of Iran, that is responsible for Iran’s support of terrorism and that commits egregious violations of human rights under which its own citizens are required to live. (b) As used in this section, the following definitions shall apply: (1) “Business operations” means maintaining, selling, or leasing equipment, facilities, personnel, or any other apparatus of business or commerce in Iran, including the ownership or possession of real or personal property located in Iran. (2) “Company” means a sole proprietorship, organization, association, corporation, partnership, venture, or other entity, its subsidiary or affiliate that exists for profitmaking purposes or to otherwise secure economic advantage. “Company” also means a company owned or controlled, either directly or indirectly, by the government of Iran, that is established or organized under the laws of or has its principal place of business in the Islamic Republic of Iran. (3) “Government of Iran” means the government of Iran or its instrumentalities or political subdivisions. “Government of Iran” also means an individual, company, or public agency located in Iran that provides material or financial support to the Islamic Republic of Iran. (4) “Invest” or “investment” means the purchase, ownership, or control of stock of a company, association, or corporation, the capital stock of a mutual water company or corporation, bonds issued by the government or a political subdivision of Iran, corporate bonds or other debt instruments issued by a company, or the commitment of funds or other assets to a company, including a loan or extension of credit to that company. (5) “Iran” means the Islamic Republic of Iran or a territory under the administration or control of Iran. (c) (1) Investments by a domestic insurer included on the list of companies by the Department of General Services pursuant to subdivision (b) of Section 2203 of the Public Contract Code shall be treated as nonadmitted assets. Utilization of this list by a domestic insurer to review its investments shall be deemed automatic compliance by the department. (2) On or before June 30, 2013, and annually thereafter, the insurer shall determine what investments it has in companies included on the Department of General Services list. (d) The insurer shall provide the department, on an annual basis, a list of investments the insurer has in companies included on the Department of General Services list described in subdivision (c), including, but not limited to, the issuer, by name, of the stock, bonds, securities, and other evidence of indebtedness. (e) If the insurer sells or transfers all of its investments in companies included on the Department of General Services list described in subdivision (c), this section shall not apply to that insurer. (f) This section shall cease to be operative if both of the following apply: (1) Iran is removed from the United States Department of State’s list of countries that have been determined to repeatedly provide support for acts of international terrorism. (2) Pursuant to the appropriate federal statute, the President of the United States determines and certifies to the appropriate committee of the Congress of the United States that Iran has ceased its efforts to design, develop, manufacture, or acquire a nuclear explosive device or related materials and technology. (g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application. (Added by Stats. 2012, Ch. 479, Sec. 1. (AB 2160) Effective January 1, 2013. Conditionally inoperative as provided in subd. (f).)
  182. 12410.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    When enforcing this article, the commissioner may use the remedies provided in Section 12928.6.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12410. In enforcing any of the provisions of this article, the commissioner shall be entitled to the remedies provided for in Section 12928.6 of this code. (Added by Stats. 1949, Ch. 891.)
  183. 12411.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    After a hearing, the commissioner may suspend or revoke a title insurer’s certificate of authority or an underwritten title company’s license if it willfully fails to comply with this article after 10 days’ written notice.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12411. The commissioner may after a hearing suspend or revoke the certificate of authority of any title insurer or the license of any underwritten title company licensed pursuant to the provisions of Section 12389, which, after 10 days’ written notice from the commissioner requiring it to comply with the provisions of this article willfully fails to do so. (Amended by Stats. 1974, Ch. 436.)
  184. 12412.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    The section allows certain fee-sharing for actual work and services among title insurers and underwritten title companies if it is not an unlawful rebate or otherwise barred, and it requires the full charge for obtaining a title policy to be shown on the policy.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12412. Nothing in this article prohibits the division of fees or charges, for work and services actually performed, between title insurers or between title insurers and underwritten title companies or between underwritten title companies, if such division does not constitute an unlawful rebate as defined by Section 12404.5, or is prohibited by Section 12405.7 or 12408.5. The entire charge made to obtain a title policy shall be set forth on the title policy. (Amended by Stats. 1985, Ch. 443, Sec. 1.)
  185. 12413.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Title insurance, controlled escrow, and underwritten title companies must wait to disburse escrow funds until the applicable availability timing is met, with limited same-day and early-release exceptions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12413.1. No title insurance company, controlled escrow company, or underwritten title company shall disburse funds from an escrow account until the day established by the following: (a) Except for funds deposited by cash or by electronic payment, deposits accorded next day availability pursuant to Part 229 of Title 12 of the Code of Federal Regulations may not be disbursed until the business day following the business day of deposit. (b) Except for drafts, deposits not accorded next day availability pursuant to Part 229 of Title 12 of the Code of Federal Regulations shall not be disbursed until the day on which these funds must be made available to depositors under the federal regulation specified in this subdivision. (c) Funds deposited by cash or by electronic payment may be disbursed following deposit on the same business day as the business day of deposit. (d) Notwithstanding the provisions of subdivision (b), deposits other than drafts may be disbursed on the business day following the business day of deposit if the financial institution to which the funds have been deposited informs the title insurance company, controlled escrow company, or underwritten title company in writing that final settlement has occurred on the deposited item. For the purposes of this subdivision, an electronically transmitted document that specifies that final settlement has occurred constitutes written notice as to an individual item. (e) Where a draft, other than a share draft, has been received and submitted for collection, no title insurance company, controlled escrow company, or underwritten title company shall disburse funds from an escrow account with respect to the draft until the proceeds of the draft have become available for withdrawal from the financial institution to which the draft has been submitted for collection. For purposes of this subdivision, “available for withdrawal” means when the draft has been submitted for collection and payment received. Notwithstanding this subdivision, disbursement of funds represented by share drafts shall be governed by subdivisions (b) and (d), if applicable. (f) For purposes of this section, “escrow account” means any depository account with a financial institution to which funds are deposited with respect to any transaction wherein one person, for the purpose of effecting the sale, transfer, encumbering or leasing of real or personal property to another person, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by that third person until the happening of a specified event or the performance of a prescribed condition, when it is then to be delivered by that third person to a grantee, grantor, promisee, promisor, obligee, obligor, bailee, bailor, or any agency or employee of the latter. (g) Except as provided in subdivision (h), for purposes of this section, any word or term used herein or relevant to interpretation of this section, including, but not limited to, “available for withdrawal,” “check,” “electronic payment,” and “business day,” which is defined in Part 229 of Title 12 of the Code of Federal Regulations on January 1, 1990, shall have the meaning there given as the regulations existed on January 1, 1990. (h) For purposes of this section, “financial institution” means any financial institution specified in Section 12413.5. (i) No title insurance company, controlled escrow company, or underwritten title company shall be liable for a violation of this section if the violation was not intentional or resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid that error. Examples of bona fide errors include, but are not limited to, clerical, calculation, computer malfunction and programming, and printing errors. (j) Nothing in this section shall be deemed to prohibit the recordation of documents prior to the time funds are available for disbursement with respect to a transaction provided the parties to the transaction consent in writing prior thereto. (k) Nothing in this section is intended to amend, alter, or supersede other sections of this code, or other laws of this state or the United States, regarding an escrow holder’s duties and obligations. (Amended by Stats. 1990, Ch. 872, Sec. 2.)
  186. 12413.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Certain title and escrow companies must deposit or submit for collection any item or draft received in connection with an escrow by the next business day.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12413.2. Any item or draft received by a title insurance company, controlled escrow company, or underwritten title company in connection with any escrow shall be deposited in, or submitted for collection to, a financial institution as defined in Section 12413 no later than the close of the next business day following receipt. For purposes of this section, “item” means any check, including a cashier’s check, negotiable order of withdrawal, share draft, traveler’s check, or money order. (Added by Stats. 1988, Ch. 389, Sec. 1.)
  187. 12413.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. )

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    Escrow funds handled by certain title-related companies must be kept in a separate account and used only for that escrow; related interest generally goes to the depositing party.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6. Rebates and Commissions [12404 - 12413.5] ( Article 6 added by Stats. 1949, Ch. 891. ) ## 12413.5. All funds received in connection with any escrow conducted by a title insurance company, controlled escrow company, or underwritten title company shall be deposited in a separate depository account in a bank or savings and loan association or in an account in an industrial loan company insured by the Federal Deposit Insurance Corporation, and the funds so deposited shall be the property of the person or persons entitled thereto under the provisions of the escrow and segregated escrow by escrow in the records of the title insurance company, controlled escrow company, or underwritten title company. The funds shall not be subject to any debts of the title insurance company, controlled escrow company, or underwritten title company and shall be used only to fulfill the terms of the individual escrow for which the funds were accepted and none of the funds shall be utilized until the conditions of the escrow have been met. Any interest received on funds deposited in connection with any escrow which are deposited in a bank, savings and loan association, or industrial loan company shall be paid over by the escrow to the depositing party to the escrow unless the escrow is otherwise instructed by the depositing party, and shall not be transferred to the account of the title insurance company, controlled escrow company, or underwritten title company. (Amended by Stats. 1989, Ch. 328, Sec. 2.)
  188. 12414.13.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. )

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    A person aggrieved by certain title insurance rating actions may request written review, then file a written complaint and hearing request with the commissioner if review is refused or partial relief is denied.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. ) ## 12414.13. Any person aggrieved by any rate charged, rating plan or rating system followed or adopted by a title insurer, underwritten title company, or controlled escrow company may request such person or entity to review the manner in which the rate, plan, system, or rule has been applied with respect to insurance or services afforded him. Such request may be made by his authorized representative, and shall be written. If the request is not granted within 30 days after it is made, the requestor may treat it as rejected. Any person aggrieved by the action of any such person or entity in refusing the review requested, or in failing or refusing to grant all or part of the relief requested, may file a written complaint and request for hearing with the commissioner, specifying the grounds relied upon. If the commissioner has information concerning a similar complaint he may deny the hearing. If he believes that probable cause for the complaint does not exist or that the complaint is not made in good faith he shall deny the hearing. Otherwise, and if he finds that the complaint charges a violation of Article 5.5 (commencing with Section 12401) and that the complainant would be aggrieved if the violation is proved, he shall proceed as provided in Section 12414.14. (Added by Stats. 1973, Ch. 1130.)
  189. 12414.14.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. )

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    If the commissioner has good cause to think a title insurer, underwritten title company, or controlled escrow company is not complying with Article 5.5, the commissioner must give written notice describing the problem and allowing time to correct it.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. ) ## 12414.14. If after examination of a title insurer, an underwritten title company, or a controlled escrow company, or upon the basis of other information, or upon sufficient complaint as provided in Section 12414.13, the commissioner has good cause to believe that such person or entity, or any rate, rating plan or rating system made or used by any such person or entity does not comply with the requirements and standards of Article 5.5 (commencing with Section 12401) he shall, unless he has good cause to believe such noncompliance is willful, give notice in writing 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 nor more than 30 days thereafter, in which such noncompliance may be corrected. Notices under this section shall be confidential as between the commissioner and the parties unless a hearing is held under Section 12414.15. (Added by Stats. 1973, Ch. 1130.)
  190. 12414.15.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. )

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    The commissioner may hold a public hearing about certain noncompliance issues, but must mail written notice at least 10 days before the hearing.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. ) ## 12414.15. If the commissioner has good cause to believe such noncompliance to be willful, or if within the period prescribed by the commissioner in the notice required by Section 12414.14 the title insurer, underwritten title company, or controlled escrow company does not make such changes as may be necessary to correct the noncompliance specified by the commissioner or establish to the satisfaction of the commissioner that such specified 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 be not 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 title insurer, underwritten title company, or controlled escrow company. 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 12414.14, 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 12414.14 or this section. (Added by Stats. 1973, Ch. 1130.)
  191. 12414.16.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. )

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    After a hearing, the commissioner may order a title insurance rate, rating plan, or rating system to stop being used if it violates the code, and may suspend or revoke certain certificates or licenses if the violation was willful.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. ) ## 12414.16. If after a hearing pursuant to Section 12414.15 the commissioner finds: (a) That any rate, rating plan or rating system violates the provisions of Article 5.5 (commencing with Section 12401), he may issue an order to the person or entity which has been the subject of the hearing specifying in what respects such violation exists and stating when, within a reasonable period of time, the further use of such rate or rating system by such person or entity in the business of title insurance made thereafter shall be prohibited. (b) That the violation which has been the subject of hearing was willful, he may suspend or revoke, in whole or in part, the certificate of authority of such title insurer or the license of such underwritten title company or controlled escrow company with respect to the transaction of the business of title insurance which has been the subject matter of the hearing. (Added by Stats. 1973, Ch. 1130.)
  192. 12414.17.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. )

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    The commissioner may suspend or revoke a person’s or entity’s authority to do title insurance business if they fail to comply on time with a lawful commissioner’s order.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. ) ## 12414.17. In addition to other penalties provided in this code, the commissioner may suspend or revoke, in whole or in part, the authority of any person or entity to engage in the business of title insurance upon the failure of any such person or entity to comply within the time limited by such order or any extension thereof which the commissioner may grant, with an order of the commissioner lawfully made by him pursuant to Section 12414.16 and effective pursuant to Section 12414.19. (Added by Stats. 1973, Ch. 1130.)
  193. 12414.18.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. )

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    Proceedings about denying, suspending, or revoking a license or certificate of authority must follow Government Code Chapter 5, unless this chapter says otherwise, and the commissioner has the powers granted there.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. ) ## 12414.18. Except as otherwise provided in this chapter, all proceedings in connection with the denial, suspension, or revocation of a license or certificate of authority under this chapter shall be conducted in accordance with the provisions of Chapter 5 (commencing with Section 11500) 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. 1973, Ch. 1130.)
  194. 12414.19.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. )

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    Commissioner decisions under the listed articles can be reviewed by state courts, and they do not take effect until after notice and waiting periods.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.7. Hearings, Procedure, and Judicial Review [12414.13 - 12414.19] ( Article 6.7 added by Stats. 1973, Ch. 1130. ) ## 12414.19. Any finding, determination, rule, ruling, or order made by the commissioner under Article 5.5 (commencing with Section 12401), Article 5.7 (commencing with Section 12402), Article 6.7 (commencing with Section 12414.13), and Article 6.9 (commencing with Section 12414.20) of this chapter shall be subject to review by the courts of the state and proceedings on review shall be in accordance with the provisions of the Code of Civil Procedure. In such proceedings on review, the court is authorized and directed to exercise its independent judgment on the evidence and unless the weight of the evidence supports the findings, determination, rule, ruling, or order of the commissioner, the same shall be annulled. Notwithstanding any other provision of law to the contrary, a petition for review of any such finding, determination, rule or order, may be filed at any time before the effective date thereof. No such finding, determination, rule, or order shall become effective before the expiration of 20 days after notice and a copy thereof are mailed or delivered to the person or entity affected, and any finding, determination, rule, or order of the commissioner so submitted for review shall not become effective for a further period of 15 days after the petition for review is filed with the court. The court may stay the effectiveness thereof for a longer period. (Amended by Stats. 1974, Ch. 436.)
  195. 12414.20.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. )

    Verify source ↗

    The commissioner may examine any advisory organization for title insurance in this state whenever reasonable and necessary.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. ) ## 12414.20. The commissioner may, as often as may be reasonable and necessary, make or cause to be made an examination of any advisory organization for the business of title insurance in this state. (Added by Stats. 1973, Ch. 1130.)
  196. 12414.21.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. )

    Verify source ↗

    The commissioner may examine title insurers, underwritten title companies, and controlled escrow companies that are engaged in title insurance, under prescribed reasonable rules, to check compliance with Article 5.5 and related rate and rating system standards.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. ) ## 12414.21. The commissioner may, pursuant to reasonable rules and regulations which he shall prescribe, make or cause to be made an examination of every title insurer, underwritten title company or controlled escrow company engaged in the business of title insurance to ascertain whether such person or entity and every rate and rating system used in the business of title insurance complies with the requirements and standards of Article 5.5 (commencing with Section 12401) of this chapter. Such examination shall not be a part of a periodic general examination participated in by a representative of more than one state. (Added by Stats. 1973, Ch. 1130.)
  197. 12414.22.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. )

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    Certain insurance-related officers, managers, agents, and employees may be examined under oath and must provide specified operational records and information.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. ) ## 12414.22. The officers, managers, agents, and employees of any advisory organization, title insurer, underwritten title company, or controlled escrow company may be examined at any time under oath and shall exhibit all books, records, accounts, documents, or agreements governing their method of operation, together with all data, statistics, and information of every kind and character collected or considered by such persons or entities in the conduct of the operations to which such examination relates. (Added by Stats. 1973, Ch. 1130.)
  198. 12414.23.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. )

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    Certain title insurance entities must pay examination costs, and a written report from a full balance sheet financial examination must be given to the examined entity within 30 days.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. ) ## 12414.23. The reasonable cost of any examination authorized by this article shall be paid by the advisory organization, title insurer, underwritten title company, or controlled escrow company to be examined. A copy of any written report which is prepared as a result of a full balance sheet financial examination conducted pursuant to Section 12389, shall be provided to the entity examined within 30 days following the production of the report. In the event any examination or review of financial statements has resulted in a requirement of, or directive to, the entity to make changes in its conduct or the business of title insurance, those requirements or directives shall be in writing, and provided to the entity. (Amended by Stats. 1990, Ch. 370, Sec. 1.)
  199. 12414.24.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. )

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    Certain title insurance-related actors must not withhold information or give false or misleading information to the commissioner or an advisory organization when the information could affect title insurance rates.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. ) ## 12414.24. No person, title insurer, underwritten title company, controlled escrow company, or advisory organization shall willfully withhold information from, or knowingly give false or misleading information to, the commissioner or to any advisory organization which will affect rates for the business of title insurance to which the provisions of this chapter are applicable. (Added by Stats. 1973, Ch. 1130.)
  200. 12414.25.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. )

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    If certain title-insurance-related actors fail to comply with a final commissioner order, they can be fined; willful failures can trigger a higher fine. Willful violations of this chapter are misdemeanors, except subdivision (b)(2) does not apply to Section 12389.7.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 6. INSURANCE COVERING LAND [12340 - 12661] ( Part 6 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. Title Insurance [12340 - 12418.4] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 6.9. Examinations, Penalties and Miscellaneous [12414.20 - 12414.31] ( Article 6.9 added by Stats. 1973, Ch. 1130. ) ## 12414.25. (a) Any person, title insurer, underwritten title company, or controlled escrow company who fails to comply with a final order of the commissioner under this chapter shall be liable to the state in an amount not exceeding one hundred dollars ($100), but if that failure is willful he, she, or it shall be liable to the state in an amount not exceeding five thousand dollars ($5,000) for that 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. Those penalties may be in addition to any other penalties provided by law. (b) (1) A willful violation of the provisions of this chapter is a misdemeanor. (2) This subdivision is not applicable to Section 12389.7. (Amended by Stats. 2013, Ch. 321, Sec. 27. (AB 1391) Effective January 1, 2014.)

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