Insurance Code, 1935

This section defines terms used in the article, including CGAD, insurance group, insurer, ORSA Summary Report, and the model regulation.

Insurers, and some insurance groups, must file a CGAD with the commissioner by June 1 each year, or with the lead-state commissioner if they are part of an insurance group.

The commissioner may issue necessary rules, regulations, and orders for this article, after notice and an opportunity to be heard, and must follow the Administrative Procedure Act for adopting, amending, or repealing those rules.

Insurers or insurance groups must prepare the CGAD consistently with the NAIC model and keep supporting documentation available to the commissioner; the commissioner may ask for more material information.

The commissioner must keep covered CGAD-related documents confidential and generally cannot disclose them without the insurer’s written consent, but may share or use them for regulatory purposes under stated safeguards.

The commissioner may hire outside consultants to review CGAD information, but those consultants must follow confidentiality rules and several disclosure controls apply.

An insurer or insurer group that fails, without just cause, to timely file the CGAD must pay the late filing fees set out in Section 924.

Most provisions in this article, except Section 936.6, are severable.

The Legislature states findings about California insurance market and climate-risk information, and says regularly updated information may be used to help the department analyze reinsurance trends and communicate with consumers.

Certain admitted insurers must file an annual report with the commissioner, and the commissioner may set the report’s format and content.

Information submitted to the commissioner under this article must be kept confidential, is exempt from the California Public Records Act, cannot be subpoenaed, and related testimony is not admissible in a civil proceeding.

The commissioner must post an aggregated report on the department’s website based on data collected under Section 937.1.

An admitted insurer that fails to submit the required Section 937.1 report can be fined, and the commissioner can also grant a 30-day extension for unintended or unforeseen delays.

The commissioner may make regulations to further this article’s purposes.

The Department of Insurance must collect data on insurance for zero-emission heavy-duty trucks, insurers must respond to the first collection by May 1, 2024, and the commissioner must publish only aggregate results.

The Department of Insurance must build an online insurance information tool and prepare an assessment and strategy about insurance for zero-emission heavy-duty truck technologies, with help from the State Air Resources Board.

Deposits of securities with the commissioner are subject to this article unless another provision expressly says otherwise.

The commissioner must accept and hold securities in trust for policyholders, or policyholders and creditors, when the stated deposit conditions apply.

The commissioner must charge $58 in advance to receive and process securities deposit schedules, plus $29 for each withdrawal, substitution, or other change in the securities deposit. No other fee may be charged for attaching the commissioner’s seal.

Deposited securities may not be estimated above par value or market value; preferred stock may be estimated only at market value.

The commissioner must allow a deposit of the specified securities in the State Treasury, and the Treasurer must deposit the money under the Government Code provisions cited.

If the insurer remains solvent, the commissioner must allow it to collect interest or dividends on deposited securities and to withdraw them if replacement securities are deposited.

Securities deposited under this article may be withdrawn from the State treasury only with the insurer’s written order endorsed by the commissioner, or by order of a court of competent jurisdiction.

If the deposit consists of mortgages, it must be accompanied by specified title documents, and the insurer making the deposit must pay appraisal fees. The commissioner may also require additional title insurance or a guaranty if the cost is not unreasonable or would not make the deposit impracticable.

If a deposit consists of stocks or bonds, it must be accompanied by the fees needed to appraise them, unless Article 3 of Chapter 1, Part 2, Division 1 provides אחרת.

If an insurer deposits the required security in line with this article, the commissioner must issue a certificate of deposit.

The commissioner must require a $72 fee, paid in advance, for each certificate issued under this article.

A depositing insurer may ask the commissioner to return its deposit once its outstanding policies and related liabilities have been paid, canceled, reinsured, extinguished, or assumed; the request must be written and verified.

While an examination is pending, the securities requested to be withdrawn may continue to be handled under the withdrawal and substitution rules in section 943.

If the outside laws that triggered Section 940 are repealed and abrogated, the commissioner must return the related deposit to the depositing insurer.

If a domestic insurer deposited securities to do business in another state, and later stops doing business there and files conclusive proof that the related policies have ended, been paid, canceled, or reinsured, the securities must be returned on demand.

The commissioner must examine each insurer’s deposited securities every year and notify the insurer if the deposit is short; if the shortfall is not fixed within 30 days after notice, the commissioner may revoke the insurer’s certificate of authority and countermand related certificates.

The commissioner must pay appraisal fees collected under this article into the State treasury in trust.

Certain insured bank or savings and loan accounts must be accepted as securities for a deposit made with the commissioner.

This section establishes the Wildfire Safety and Risk Mitigation Program.

The department must administer the Wildfire Safety and Risk Mitigation Program, award grants competitively, and set grant standards, schedules, and procedures.

When evaluating grant proposals under this article, the department must prioritize projects that show one or more listed wildfire-safety and risk-mitigation benefits.

The department must create a framework and multiyear plan for a public wildfire catastrophe model, and publish it on the department website when complete.

The section creates the Wildfire Safety and Risk Mitigation Account in the Insurance Fund and directs that its funds be used for public wildfire catastrophe modeling.

After the first round of grants is implemented, the department must identify, publish, and post key milestones for completing a public wildfire catastrophe model on its website.

The department must give budget-allocation recommendations for this article to specified legislative committees and the Governor before September 1, 2026.

This section says the article does not limit or conflict with the insurance commissioner’s rate-regulation authority or other code provisions.

This article becomes operative only if the Legislature appropriates funds for these purposes.

In this article, “liability” includes liability for losses reported, expenses, taxes, and other indebtedness not already covered by those categories.

A mortgage insurer or mortgage guaranty insurer is treated as insolvent if, after required surplus is exhausted, its liabilities and unearned income would reduce paid-in capital below $250,000 or below 75% of issued capital stock.

This section defines insolvency for insurers and requires insurers to have enough assets and reinsurance provision; it also requires the commissioner to set estimating standards.

If an admitted insurer becomes insolvent, the commissioner must prepare a public report on the causes and factors of the insolvency and submit it to the Governor and Legislature within one year.

Costs incurred to investigate and prepare the report required by Section 985.5 are treated as an expense of administration.

A life insurer issuing reserve-basis policies is insolvent when its assets are less than the total of its liabilities, required paid-in capital, and reinsurance amount for all outstanding risks.

A title insurer is insolvent if, after using its required surplus, its liabilities reduce paid-in capital below $250,000 or below 75% of the par value of issued capital stock.

If an insurer becomes impaired, its chief executive officer must immediately notify the commissioner and the board in writing. Other officers, directors, or trustees who know or should know of the impairment must notify the chief executive officer. Violations can lead to criminal penalties.

A person must not hide insurer property or related documents, or transfer or conceal property in contemplation of a state insolvency proceeding; doing so is a misdemeanor.

This article defines certain insurance compensation terms and says it applies only to automobile and automobile liability insurance.

Certain insurance agents and related persons must promptly report policy claims to the insurer, and insurers must record claims and set reserves.

An insurer generally may not count certain amounts due under contingent or retrospective compensation arrangements as assets above the money actually held in a trusteed bank account, unless the other party is solvent under the section’s written-acknowledgment rule. The commissioner may examine a person dealing with an insurer if there is reason to doubt solvency.

People operating under retrospective or contingent compensation arrangements must report premium and fee amounts to the insurer within a reasonable time, unless a narrow uniform-policy exception applies.

An insurer must keep the unearned portion of premium charges as a liability in its unearned premium reserve, even if a contingent or retrospective compensation arrangement says otherwise.

An insurer must report and pay premium tax liability based on the full premium charge received, including policy fees, minus return premiums as allowed by law.

An insurer may agree in advance that a person will reimburse examination expenses, and the commissioner may spread those expenses among insurers in some cases.

The commissioner must issue reasonable rules and regulations, including solvency standards, at least 90 days before charging anyone with a violation of Section 816 or this article.

Admitted insurers must keep certain disability insurance reserves at or above specified standards, and the commissioner may issue regulations setting reserve standards.