Insurance Code — Part 6 | INS — United States — California law | Esheria

Insurance Code

Part 6 of 23 · provisions 1,001–1,200

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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. 10509.914.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. )

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    This section requires annuity recommendations to be suitable for the consumer and adds disclosure, recordkeeping, training, supervision, and anti-steering rules for producers and insurers.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. ) ## 10509.914. (a) In recommending to a consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions, the producer, or an insurer if no producer is involved, shall have reasonable grounds for believing that the recommendation is suitable for the consumer on the basis of the facts disclosed by the consumer as to their investments and other insurance products and as to their financial situation and needs, including the consumer’s suitability information, and that there is a reasonable basis to believe all of the following: (1) The consumer has been reasonably informed of various features of the annuity, such as the potential surrender period and surrender charge, potential tax penalty if the consumer sells, exchanges, surrenders, or annuitizes the annuity, mortality and expense fees, investment advisory fees, potential charges for and features of riders, limitations on interest returns, insurance and investment components, and market risk. (2) The consumer would receive a tangible net benefit from the transaction. (3) The particular annuity as a whole, the underlying subaccounts to which funds are allocated at the time of purchase or exchange of the annuity, and riders and similar product enhancements, if any, are suitable, and in the case of an exchange or replacement, the transaction as a whole is suitable, for the particular consumer based on their suitability information. (4) In the case of an exchange or replacement of an annuity, the exchange or replacement is suitable, including taking into consideration all of the following: (A) Whether the consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits, such as death, living, or other contractual benefits, or be subject to increased fees, investment advisory fees, or charges for riders and similar product enhancements. (B) Whether the consumer would benefit from product enhancements and improvements. (C) Whether the consumer has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding 60 months. (b) Prior to the execution of a purchase, exchange, or replacement of an annuity resulting from a recommendation, a producer, or an insurer where no producer is involved, shall make reasonable efforts to obtain the consumer’s suitability information. (c) Except as permitted under subdivision (d), an insurer shall not issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity is suitable based on the consumer’s suitability information. The preceding sentence and subdivision (d) notwithstanding, neither a producer nor an insurer shall in any event recommend to a person 65 years of age or older the sale of an annuity to replace an existing annuity that requires the insured to pay a surrender charge for the annuity that is being replaced, where purchase of the annuity does not confer a substantial financial benefit over the life of the policy to the consumer, so that a reasonable person would believe the purchase is unnecessary. (d) (1) Except as provided under paragraph (2), neither a producer nor an insurer shall have any obligation to a consumer under subdivision (a) or (c) related to an annuity transaction if any of the following occur: (A) No recommendation is made. (B) A recommendation was made and was later found to have been prepared based on materially inaccurate information provided by the consumer. (C) A consumer refuses to provide relevant suitability information and the annuity transaction is not recommended. (D) A consumer decides to enter into an annuity transaction that is not based on a recommendation of the insurer or the producer. (2) An insurer’s issuance of an annuity subject to paragraph (1) shall be reasonable under all the circumstances which are actually known, or which after reasonable inquiry should be known, to the insurer or the producer at the time the annuity is issued. (e) A producer or, where no producer is involved, the responsible insurer representative, shall, at the time of sale, do all of the following: (1) Make a record of any recommendation subject to subdivision (a). (2) Obtain a customer-signed statement documenting the customer’s refusal to provide suitability information, if any. (3) Obtain a customer-signed statement acknowledging that an annuity transaction is not recommended if the customer decides to enter into an annuity transaction that is not based on the producer’s or insurer’s recommendation. (f) (1) An insurer shall establish a supervision system that is reasonably designed to achieve the insurer’s and its producers’ compliance with this article, including, but not limited to, all of the following: (A) The insurer shall maintain reasonable procedures to inform its producers of the requirements of this article and shall incorporate the requirements of this article into relevant producer training manuals. (B) The insurer shall establish standards for producer product training and shall maintain reasonable procedures to require its producers to comply with the requirements of Section 10509.915. (C) The insurer shall provide product-specific training and training materials which explain all material features of its annuity products to its producers. (D) The insurer shall maintain procedures for review of each recommendation prior to issuance of an annuity that are designed to ensure that there is a reasonable basis to determine that a recommendation is suitable. The review procedures may apply a screening system for the purpose of identifying selected transactions for additional review and may be accomplished electronically or through other means, including, but not limited to, physical review. An electronic or other system may be designed to require additional review only of those transactions identified for additional review by the selection criteria. (E) The insurer shall maintain reasonable procedures to detect recommendations that are not suitable. This may include, but is not limited to, confirmation of consumer suitability information, systematic customer surveys, interviews, confirmation letters, and programs of internal monitoring. Nothing in this subparagraph prevents an insurer from complying with this subparagraph by applying sampling procedures or by confirming suitability information after issuance or delivery of the annuity. (F) The insurer shall annually provide a report to its senior management, including to the senior manager responsible for audit functions, which details a review, with appropriate testing, reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any. (2) (A) Nothing in this subdivision restricts an insurer from contracting for performance of a function, including maintenance of procedures, required under paragraph (1). An insurer is responsible for taking appropriate corrective action, and may be subject to sanctions and penalties pursuant to Section 10509.916 regardless of whether the insurer contracts for performance of a function and regardless of the insurer’s compliance with subparagraph (B). An insurer is responsible for the compliance of its producer with the provisions of this article regardless of whether the insurer contracts for performance of a function required under this subdivision and regardless of the insurer’s compliance with subparagraph (B). (B) An insurer’s supervision system under paragraph (1) shall include reasonable supervision of contractual performance under this subdivision. This includes, but is not limited to, both of the following: (i) Reasonable monitoring and, as appropriate, conducting audits to ensure that the contracted function is properly performed. (ii) Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed. (3) An insurer is not required to include in its system of supervision a producer’s recommendations to consumers of products other than the annuities offered by the insurer. (g) A producer or insurer shall not dissuade, or attempt to dissuade, a consumer from any of the following: (1) Truthfully responding to an insurer’s request for confirmation of suitability information. (2) Filing a complaint. (3) Cooperating with the investigation of a complaint. (h) (1) This subdivision applies to FINRA broker-dealer sales of variable and fixed annuities. (2) Sales by FINRA broker-dealers that comply with the suitability and supervision system requirements set forth in FINRA Rule 2330, or any successor rule, shall satisfy the suitability and supervision system requirements of this article, provided that the suitability criteria used also include both of the following: (A) The consumer’s income. (B) The intended use of the annuity. (3) Except as provided in paragraphs (1) and (2), all other provisions of this article remain applicable to these broker-dealer sales. (4) Nothing in this subdivision shall limit the commissioner’s ability to enforce, including conducting investigations related to, the provisions of this article. (5) “FINRA” means the Financial Industry Regulatory Authority or a successor agency. (Amended by Stats. 2024, Ch. 2, Sec. 3. (SB 263) Effective January 1, 2025.)
  2. 10509.915.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. )

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    Producers may not solicit annuity sales unless they have adequate product knowledge and meet insurer training standards. They must take required annuity training, and insurers must verify completion before allowing annuity sales.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. ) ## 10509.915. (a) A producer shall not solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with the insurer’s standards for product training. A producer may rely on insurer-provided product-specific training standards and materials to comply with this subdivision. (b) (1) A producer who is otherwise entitled to engage in the sale of annuity products shall complete a one-time eight credit-hour annuity training course approved by the commissioner and provided by a commissioner-approved education provider, prior to commencing the transaction of annuities, pursuant to subdivision (a) of Section 1749.8. (2) In addition to the requirement set forth in paragraph (1), every producer who engages in this state in the sale of annuity products shall satisfactorily complete four continuing education credits prior to license renewal every two years, pursuant to subdivision (b) of Section 1749.8. (3) The training required under this subdivision shall include information on all of the following topics: (A) The types of annuities and various classifications of annuities. (B) Identification of the parties to an annuity. (C) How fixed, variable, and indexed annuity contract provisions affect consumers. (D) The application of income taxation of qualified and nonqualified annuities. (E) The primary uses of annuities. (F) Prohibited sales practices, the recognition of indicators that a prospective insured may lack the short-term memory or judgment to knowingly purchase an insurance product, and fraudulent and unfair trade practices, as well as replacement and disclosure requirements for sales of annuities, all as provided under California law, including, but not limited to, this article. (4) Providers of courses intended to comply with this section shall cover all topics listed in the prescribed outline and shall not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer’s products. Additional topics may be offered in conjunction with and in addition to the required outline. (5) A provider of an annuity training course intended to comply with this section shall register as a CE provider in this state and comply with the rules and guidelines applicable to producer continuing education courses as set forth in Section 1749.8, in subdivisions (d) and (e) of Section 1749.1, and in Sections 2188, 2188.1, 2188.2, 2188.3, 2188.4, 2188.50, 2188.6, 2188.7, 2188.8, and 2188.9 of Title 10 of the California Code of Regulations. (6) Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with Sections 2188.2 and 2188.3 of Title 10 of the California Code of Regulations. (7) Providers of annuity training shall comply with the reporting requirements and shall issue certificates of completion in accordance with Section 2188.8 of Title 10 of the California Code of Regulations. (8) An insurer shall verify that a producer has completed the annuity training required under this section before allowing the producer to sell an annuity product for that insurer. An insurer may satisfy its responsibility under this paragraph by obtaining certificates of completion of the training course or obtaining reports provided by commissioner-sponsored database systems or vendors or from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance education providers. (Amended by Stats. 2024, Ch. 2, Sec. 4. (SB 263) Effective January 1, 2025.)
  3. 10509.916.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. )

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    An insurer is responsible for compliance with this article, and the commissioner may order corrective action and penalties if a violation occurs.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. ) ## 10509.916. (a) An insurer is responsible for compliance with this article. If a violation occurs, either because of the action or inaction of the insurer or its insurance producer, the commissioner may, in addition to any other available penalties, remedies, or administrative actions, order any or all of the following: (1) An insurer to take reasonably appropriate corrective action for any consumer harmed by the insurer’s, or by its insurance producer’s, violation of this article. (2) A managing general agent or an insurance producer to take reasonably appropriate corrective action for any consumer harmed by the insurance producer’s violation of this article. (3) Penalties and sanctions pursuant to Section 10509.9. For purposes of Section 10509.9, this article shall be deemed to be part of Article 8 (commencing with Section 10509), and the commissioner may in a single enforcement action seek penalties for a first and a second or subsequent violation. (b) Nothing in this article shall affect any obligation of an insurer for acts of its agents, or any consumer remedy or cause of action that is otherwise provided for. (Added by Stats. 2011, Ch. 295, Sec. 2. (AB 689) Effective January 1, 2012.)
  4. 10509.917.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. )

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    Insurers and insurance producers must keep or be able to provide certain transaction-related records to the commissioner for five years after the transaction is completed.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. ) ## 10509.917. (a) Insurers and insurance producers shall maintain or be able to make available to the commissioner records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for five years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of an insurance producer. (b) Records required to be maintained by this article may be maintained in paper, photographic, microprocess, magnetic, mechanical, or electronic media, or by any process that accurately reproduces the actual document. (Added by Stats. 2011, Ch. 295, Sec. 2. (AB 689) Effective January 1, 2012.)
  5. 10509.918.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. )

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    The commissioner must adopt reasonable rules and regulations needed to administer this article, after notice and hearing, and may also adopt regulations under federal Dodd-Frank authority if they are not inconsistent with this article.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. ) ## 10509.918. The commissioner shall, from time to time as conditions warrant, after notice and hearing, adopt reasonable rules and regulations, and amendments and additions thereto, as are necessary to administer this article. The commissioner may adopt regulations not inconsistent with this article pursuant to Section 989J of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203). (Added by Stats. 2011, Ch. 295, Sec. 2. (AB 689) Effective January 1, 2012.)
  6. 10509.919.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. )

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    This section says the article applies to certain annuity recommendations and sales made before January 1, 2025.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9. Suitability Requirements for Annuity Transactions before January 1, 2025 [10509.910 - 10509.919] ( Heading of Article 9 amended by Stats. 2024, Ch. 2, Sec. 2. ) ## 10509.919. This article shall apply to both of the following: (a) A recommendation of an annuity made before January 1, 2025, that results in the purchase, exchange, or replacement that was recommended. (b) A sale of an annuity made before January 1, 2025, that is not based on a recommendation. (Added by Stats. 2024, Ch. 2, Sec. 5. (SB 263) Effective January 1, 2025.)
  7. 10509.9200.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    Producers must act in the consumer’s best interest when recommending annuities, and insurers must maintain a system for supervising recommendations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9200. The purpose of this article is to require producers, as defined in Section 10509.9203, to act in the best interest of the consumer when making a recommendation of an annuity and to require insurers to establish, maintain, and utilize a system to supervise recommendations and to set forth standards and procedures for recommendations to consumers that result in transactions involving annuities, so that the insurance needs and financial objectives of consumers at the time of the transaction are effectively addressed. This article does not create or imply a private cause of action for a violation of this article or subject a producer to civil liability under the best interest standard of care outlined in Section 10509.9204 or under standards governing the conduct of a fiduciary relationship. (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  8. 10509.9201.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    This section says the article applies to annuity sales and recommendations to consumers to buy, exchange, or replace an annuity.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9201. (a) This article shall apply to any sale of, or recommendation made to a consumer to purchase, exchange, or replace, as defined in paragraph (14) of subdivision (a) of Section 10509.9203, an annuity. (b) This article does not preclude, preempt, or otherwise interfere with the application of any other laws of this state that may apply in any matter involving the sale of an annuity that is subject to this article. (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  9. 10509.9202.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    This article does not apply to several listed transaction types, unless specifically included.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9202. Unless otherwise specifically included, this article shall not apply to transactions involving any of the following: (a) Direct response solicitations where there is no recommendation based on information collected from the consumer pursuant to this article. (b) Contracts used to fund any of the following: (1) An employee pension or welfare benefit plan that is covered by the federal Employee Retirement Income Security Act (ERISA) of 1974 (29 U.S.C. Sec. 1001 et seq.). (2) A plan described by Section 401(a), 401(k), 403(b), 408(k), or 408(p) of the Internal Revenue Code (IRC), as amended, if established or maintained by an employer. (3) A government or church plan defined in Section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax-exempt organization under Section 457 of the IRC. (4) A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor. (5) Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process. (6) Formal prepaid funeral contracts. (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  10. 10509.9203.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    This section defines key terms used in the annuity suitability rules.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9203. (a) For purposes of this article: (1) “Annuity” means an annuity that is an insurance product under California law that is individually solicited, whether the product is classified as an individual or group annuity. (2) “Cash compensation” means any discount, concession, fee, service fee, commission, sales charges, loan, override, or cash benefit received by a producer in connection with the recommendation or sale of an annuity from an insurer, intermediary, or directly from a consumer. (3) “Consumer profile information” means information that is reasonably appropriate to determine whether a recommendation addresses the consumer’s financial situation, insurance needs, and financial objectives, including, at a minimum, the following: (A) Age. (B) Annual income. (C) Financial situation and needs, including debts and other obligations, and the financial resources used for the funding of the annuity. (D) Financial experience. (E) Insurance needs. (F) Financial objectives. (G) Intended use of the annuity, including any riders attached thereto. (H) Financial time horizon, including the duration of existing liabilities and obligations. (I) Existing assets or financial products, including investments, annuity, and insurance holdings. (J) Liquidity needs. (K) Liquid net worth. (L) Risk tolerance, including, but not limited to, the willingness to accept nonguaranteed elements in the annuity. (M) Tax status. (N) Whether or not the consumer has a reverse mortgage. (O) Whether or not the consumer intends to apply for means-tested government benefits, including Medi-Cal or the veterans’ aid and attendance benefit. (P) Any other relevant information that the producer or the insurer knew or reasonably should have known about, as provided by the consumer. (4) “Continuing education credit” or “CE credit” means one continuing education credit hour as defined in Section 2188.2(i) of Title 10 of the California Code of Regulations. (5) “Continuing education provider” or “CE provider” means an individual or entity that is certified to offer continuing education courses pursuant to Section 2186.1(b) and Section 2188 of Title 10 of the California Code of Regulations. (6) “FINRA” means the Financial Industry Regulatory Authority or a successor agency. (7) “Insurer” means a company required to be licensed or to hold a certificate of authority, or both, under California law to provide insurance products, including annuities. (8) “Intermediary” means an entity contracted directly with an insurer or with another entity contracted with an insurer to facilitate the sale of the insurer’s annuities by producers. (9) “Material conflict of interest” means a financial interest of the producer in the sale of an annuity that a reasonable person would expect to influence the impartiality of a recommendation. “Material conflict of interest” does not include cash compensation or noncash compensation. (10) “Noncash compensation” means any form of compensation that is not cash compensation, including, but not limited to, health insurance, office rent, office support, and retirement benefits. (11) “Nonguaranteed elements” means the premiums, benefits, values, credits, charges, and other elements not guaranteed over the life of the annuity, such as credited interest rates, including any temporary bonus interest rate, dividends, noninterest-based credits, index parameters, periodic expense charges, or elements of formulas used to determine any of these nonguaranteed elements, that are subject to insurer discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation. (12) “Producer” means a person required to be licensed under California law to sell, solicit, or negotiate insurance, including annuities. “Producer” includes an insurer when no producer is involved. (13) (A) “Recommendation” means advice or guidance provided or made by a producer or an insurer to an individual consumer that was intended to result or does result in a purchase, exchange, or replacement of an annuity in accordance with that advice or guidance. (B) “Recommendation” does not include general communication to the public, generalized customer services assistance or administrative support, general educational information and tools, prospectuses, or other product and sales material. (14) “Replacement” means a transaction in which a new annuity policy or contract is to be purchased, and it is known or should be known to the proposing producer, or to the proposing insurer, whether or not a producer is involved, that by reason of the transaction, an existing annuity or insurance policy has been or is to be any of the following: (A) Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated. (B) Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values. (C) Amended so as to effect either a reduction in benefits or a reduction in the term for which coverage would otherwise remain in force or for which benefits would be paid. (D) Reissued with any reduction in cash value. (E) Used in a financed purchase. (15) “SEC” means the United States Securities and Exchange Commission. (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  11. 10509.9204.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    Producers and insurers must follow best-interest, disclosure, documentation, and supervision rules for recommended annuities.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9204. Insurers and producers have the following duties to ensure that annuities that are recommended are in the consumer’s best interest: (a) Best Interest Obligations. A producer, when making a recommendation of an annuity, shall act in the best interest of the consumer under the circumstances known at the time the recommendation is made, without placing the producer’s or insurer’s financial interest ahead of the consumer’s interest. A producer has acted in the best interest of the consumer if they have satisfied all of the following obligations regarding care, disclosure, conflict of interest, and documentation: (1) Care Obligation. (A) The producer, in making a recommendation, shall exercise reasonable diligence, care, and skill to: (i) Know the consumer’s financial situation, financial needs, insurance needs, and financial objectives. (ii) Understand the available recommendation options after making a reasonable inquiry into options available to the producer. (iii) Have a reasonable basis to believe the recommended option effectively addresses the consumer’s financial situation, financial needs, insurance needs, and financial objectives over the life of the annuity, as evaluated in light of the consumer profile information. (iv) Have a reasonable basis to believe that the consumer would receive a tangible net benefit from the transaction over the life of the product. (v) Communicate the basis or bases of the recommendation to the consumer orally and in writing and to the insurer in writing. (B) The producer’s or insurer’s recommendation to the consumer shall be based on an evaluation of the consumer’s relevant consumer profile information and other relevant information, and shall reflect the care, skill, prudence, and diligence that a reasonable producer with similar authority and licensure who is familiar with those matters would use under the circumstances then prevailing. (C) The requirements under subparagraphs (A) and (B) include making reasonable efforts to obtain consumer profile information from the consumer prior to the recommendation of an annuity. (D) The requirements under subparagraphs (A) and (B) require a producer to consider the types of products the producer is authorized and licensed to recommend or sell that address the consumer’s financial situation, insurance needs, and financial objectives. This does not require analysis or consideration of any products outside the authority and license of the producer or other possible alternative products or strategies available in the market at the time of the recommendation. Producers shall be held to standards applicable to producers with similar authority and licensure. (E) This subdivision does not create a fiduciary obligation or relationship and only creates a regulatory obligation as established in this article. (F) The consumer profile information, characteristics of the insurer, and product costs, rates, benefits, and features are factors generally relevant in making a determination whether an annuity effectively addresses the consumer’s financial situation, financial needs, insurance needs, and financial objectives, but the level of importance of each factor under the care obligation of this paragraph may vary depending on the facts and circumstances of a particular case. However, each factor shall not be considered in isolation. (G) The requirements under subparagraphs (A) and (B) include having a reasonable basis to believe the consumer would benefit from certain features of the annuity, such as annuitization, death or living benefit, or other insurance-related features. (H) The requirements under subparagraphs (A) and (B) apply to the particular annuity as a whole and the underlying subaccounts to which funds are allocated at the time of purchase or exchange of an annuity, and riders and similar product enhancements, if any. (I) The requirements under subparagraphs (A) and (B) do not mean the annuity with the lowest one-time or multiple occurrence compensation structure shall necessarily be in the best interest of the consumer. (J) The requirements under subparagraphs (A) and (B) do not mean the producer has ongoing monitoring obligations under the care obligation under this paragraph, although such an obligation may be separately owed under the terms of a fiduciary, consulting, investment advising, or financial planning agreement between the consumer and the producer. (K) In the case of an exchange or replacement of an annuity, the producer shall consider the whole transaction, which includes taking into consideration all of the following: (i) Whether the consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits, such as death, living, or other contractual benefits, or be subject to increased fees, investment advisory fees, or charges for riders or similar product enhancements. (ii) Whether the replacing product would not confer a substantial financial benefit to the consumer in comparison to the replaced product over the life of the product so that a reasonable person would believe the purchase is unnecessary. (iii) Whether the consumer has had another annuity or life insurance policy exchange or replacement and, in particular, an exchange or replacement within the preceding 60 months. (L) This article does not require a producer to obtain a license other than a producer license with the appropriate line of authority to sell, solicit, or negotiate insurance in this state, including, but not limited to, a securities license, in order to fulfill the duties and obligations of this section provided the producer does not give advice or provide services that are otherwise subject to securities laws or engage in any other activity requiring other professional licenses. (2) Disclosure Obligation. (A) Before or at the time of recommendation, or before or at the time of sale if no recommendation is made, of an annuity, the producer shall prominently disclose all of the following information to the consumer on a form substantially similar to the “Insurance Agent (Producer) Disclosure for Annuities” form in Appendix A of the 2020 National Association of Insurance Commissioners’ (NAIC) Suitability in Annuity Transactions Model Regulation. If NAIC updates or adopts a new version of the “Insurance Agent (Producer) Disclosure for Annuities” form in Appendix A of the 2020 National Association of Insurance Commissioners’ Suitability in Annuity Transactions Model Regulation after January 1, 2024, the commissioner shall adopt, and producers shall use, a substantially similar version of the new or amended “Insurance Agent (Producer) Disclosure for Annuities” form. (i) A description of the scope and terms of the relationship with the consumer and the role of the producer in the transaction. (ii) An affirmative statement on whether the producer is licensed and authorized to sell the following products: (I) Fixed annuities. (II) Fixed indexed annuities. (III) Variable annuities. (IV) Life insurance. (V) Other life and annuity products, as specified. (VI) Mutual funds. (VII) Stocks and bonds. (VIII) Certificates of deposit. (iii) (I) An affirmative statement describing the insurers the producer is authorized, contracted or appointed, or otherwise able to sell insurance products for, using the following descriptions: (ia) From one insurer. (ib) From two or more insurers. (ic) From two or more insurers, although primarily contracted with one insurer. (II) For purposes of this clause, insurers with common ownership and control shall be counted as one insurer. (iv) A description of the sources and types of cash compensation and noncash compensation to be received by the producer, including whether the producer is to be compensated for the sale of a recommended annuity by commission as part of premium or other remuneration received from the insurer, intermediary, or other producer or by fee as a result of a contract for advice or consulting services. (v) A prominent notice of the consumer’s right to request additional information regarding cash compensation to be received by the producer as described in subparagraph (B). (B) Upon request of the consumer or the consumer’s designated representative, the producer shall disclose both of the following: (i) A reasonable estimate of the amount of cash compensation to be received by the producer, which may be stated as a range of amounts or percentages. (ii) Whether the cash compensation is a one-time or multiple occurrence amount, and if a multiple occurrence amount, the frequency and amount of the occurrence, which may be stated as a range of amounts or percentages. (C) Before or at the time of recommendation or sale of an annuity, the producer shall inform the consumer of various features of the annuity, such as the potential surrender period and surrender charges, potential tax penalty if the consumer sells, exchanges, surrenders, or annuitizes the annuity, mortality and expense fees, investment advisory fees, any annual fees, potential charges for and features of riders or other options of the annuity, limitations on interest returns, potential changes in nonguaranteed elements of the annuity, insurance and investment components, and market risk. (3) Conflict of Interest Obligation. A producer shall identify and avoid or reasonably manage and prominently disclose any material conflicts of interest, including material conflicts of interest relating to an ownership interest. (4) Documentation Obligation. A producer shall, at the time of recommendation or sale, do all of the following: (A) Provide the consumer and the insurer with a written record of any recommendation and the basis for the recommendation, subject to this article. (B) Obtain a customer-signed statement documenting both of the following: (i) The customer’s refusal to provide the consumer profile information, if any. (ii) The customer’s understanding of the ramifications of not providing their consumer profile information or providing insufficient consumer profile information. (C) Obtain a customer-signed statement acknowledging that an annuity transaction is not recommended if the customer decides to enter into an annuity transaction that is not based on the producer’s or insurer’s recommendation. (5) Application of the Best Interest Obligation. Any requirement applicable to a producer under this section shall apply to every producer who has exercised material control or influence in the making of a recommendation and has received direct compensation as a result of the recommendation or sale, regardless of whether the producer has had any direct contact with the consumer. Activities such as providing or delivering marketing or educational materials, product wholesaling or other back office product support, and general supervision of a producer do not, in and of themselves, constitute material control or influence. (b) Transactions not based on a recommendation. (1) Except as provided under paragraph (2), a producer shall have no obligation to a consumer under paragraph (1) of subdivision (a) related to any annuity transaction if any of the following are true: (A) No recommendation is made. (B) A recommendation was made and was later found to have been prepared based on materially inaccurate information provided by the consumer. (C) A consumer refuses to provide relevant consumer profile information and the annuity transaction is not recommended. (D) A consumer decides to enter into an annuity transaction that is not based on a recommendation of the producer. (2) An insurer’s issuance of an annuity subject to paragraph (1) shall be reasonable under all the circumstances that are actually known, or that after reasonable inquiry should be known, to the insurer or the producer at the time the annuity is issued. (c) Supervision System. (1) Except as permitted under subdivision (b), an insurer shall not issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity would effectively address the particular consumer’s financial situation, insurance needs, and financial objectives based on the consumer’s consumer profile information. (2) An insurer shall establish, maintain, and utilize a supervision system that is reasonably designed to achieve the insurer’s and its producers’ compliance with this article, including, but not limited to, the following: (A) The insurer shall establish, maintain, and utilize reasonable procedures to inform its producers of the requirements of this article and shall incorporate the requirements of this article into relevant producer training manuals. (B) The insurer shall establish, maintain, and utilize reasonable standards for producer product training, and shall maintain and utilize reasonable procedures to require its producers to comply with the requirements of Section 10509.9205. (C) The insurer shall provide product-specific training and training materials that explain all material features of its annuity products to its producers. (D) The insurer shall establish, maintain, and utilize procedures for review of each recommendation before issuance of an annuity that are designed to ensure there is a reasonable basis to determine that the recommended annuity would effectively address the particular consumer’s financial situation, financial needs, insurance needs, and financial objectives. Such review procedures shall apply a screening system for the purpose of identifying selected transactions for additional review and may be accomplished electronically or through other means, including, but not limited to, physical review. An electronic or other system may be designed to require additional review only of those transactions identified for additional review by the selection criteria. (E) The insurer shall establish, maintain, and utilize reasonable procedures to detect recommendations that are not in compliance with subdivisions (a), (b), (d), and (e). This may include, but is not limited to, confirmation of the consumer’s consumer profile information, systematic customer surveys, producer and consumer interviews, confirmation letters, producer statements or attestations, and programs of internal monitoring. This subparagraph does not prevent an insurer from complying with this subparagraph by applying sampling procedures, or by confirming consumer profile information or other required information under this section after issuance or delivery of the annuity. (F) The insurer shall establish, maintain, and utilize reasonable procedures to assess, before or upon issuance or delivery of an annuity, whether a producer has provided to the consumer the information required to be provided under this section. (G) The insurer shall establish, maintain, and utilize reasonable procedures to identify and address suspicious consumer refusals to provide complete consumer profile information. (H) The insurer shall establish, maintain, and utilize reasonable procedures to identify and eliminate any sales contests, sales quotas, bonuses, and noncash compensation that are based on the sales of specific annuities within a limited period of time. The requirements of this subparagraph are not intended to prohibit the receipt of health insurance, office rent, office support, retirement benefits, or other employee benefits by employees, as long as those benefits are not based upon the volume of sales of a specific annuity within a limited period of time. (I) The insurer shall annually provide a written report to its senior management, including to the senior manager responsible for audit functions, that details a review, with appropriate testing, reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any. (3) (A) This subdivision does not restrict an insurer from contracting for performance of a function, including maintenance of procedures, required under this subdivision. An insurer is responsible for taking appropriate corrective action, and may be subject to sanctions and penalties pursuant to Section 10509.9206 regardless of whether or not the insurer contracts for performance of a function and regardless of the insurer’s compliance with subparagraph (B). An insurer is responsible for the compliance of its producer with the provisions of this article regardless of whether the insurer contracts for performance of a function required under this subdivision and regardless of the insurer’s compliance with subparagraph (B). (B) An insurer’s supervision system under this subdivision shall include reasonable supervision of contractual performance under this subdivision. This includes, but is not limited to, both of the following: (i) Reasonable monitoring and, as appropriate, conducting audits to assure that the contracted function is properly performed. (ii) Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed. (4) An insurer is not required to include in its system of supervision either of the following: (A) A producer’s recommendations to consumers of products other than the annuities offered by the insurer. (B) Consideration of or comparison to options available to the producer or compensation relating to those options other than annuities or other products offered by the insurer. (d) Prohibited Practices. A producer or insurer shall not dissuade, or attempt to dissuade, a consumer from any of the following: (1) Truthfully responding to an insurer’s request for confirmation of the consumer profile information. (2) Filing a complaint. (3) Cooperating with the investigation of a complaint. (e) Safe Harbor. (1) Recommendations and sales of annuities made in compliance with comparable standards shall satisfy the requirements of this section. This subdivision applies to all recommendations and sales of annuities made by financial professionals in compliance with business rules, controls, and procedures that satisfy a comparable standard even if such a standard would not otherwise apply to the product or recommendation at issue. However, this subdivision does not limit the insurance commissioner’s ability to enforce, including conducting investigations related to, the provisions of this article, regardless of whether the financial professional is operating under a comparable standard or in accordance with subdivisions (a) to (d), inclusive, of this section. (2) Paragraph (1) does not limit the insurer’s obligation to comply with paragraph (1) of subdivision (c), although the insurer may base its analysis on information received from either the financial professional or the entity supervising the financial professional. (3) For paragraph (1) to apply, an insurer shall do both of the following: (A) Monitor the relevant conduct of the financial professional seeking to rely on paragraph (1) or the entity responsible for supervising the financial professional, such as the financial professional’s broker-dealer or an investment adviser registered under federal or California securities laws using information collected in the normal course of an insurer’s business. (B) Provide to the entity responsible for supervising the financial professional seeking to rely on paragraph (1), such as the financial professional’s broker-dealer or investment adviser registered under federal or California securities laws, information and reports that are reasonably appropriate to assist the entity to maintain its supervision system. (4) For purposes of this subdivision, “financial professional” means a producer that is regulated and acting as any of the following: (A) A broker-dealer registered under federal or California securities laws or a registered representative of a broker-dealer. (B) An investment adviser registered under federal or California laws or an investment adviser representative associated with the federally or California-registered investment adviser. (C) A plan fiduciary under Section 3(21) of the federal Employee Retirement Income Security Act (ERISA) of 1974 (29 U.S.C. Sec. 1001 et seq.) or fiduciary under Section 4975(e)(3) of the Internal Revenue Code (IRC) or any amendments or successor statutes thereto. (5) For purposes of this subdivision, “comparable standards” means: (A) With respect to broker-dealers and registered representatives of broker-dealers, applicable rules of the United States Securities and Exchange Commission and the Financial Industry Regulatory Authority pertaining to best interest obligations and supervision of annuity recommendations and sales, including, but not limited to, Regulation Best Interest and any amendments or successor regulations thereto. (B) With respect to investment advisers registered under federal or California securities laws or investment adviser representatives, the fiduciary duties and all other requirements imposed on such investment advisers or investment adviser representatives by contract or under the Investment Advisers Act of 1940 (15 U.S.C. Sec. 80b-1 et seq.) or applicable state securities law, including, but not limited to, the Form ADV and interpretations. (C) With respect to plan fiduciaries or fiduciaries, the duties, obligations, prohibitions, and all other requirements attendant to such status under ERISA or the IRC, and any amendments or successor statutes thereto. (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  12. 10509.9205.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    Producers must not solicit annuity sales unless they know the product and meet insurer training standards; they must complete required annuity training and continuing education before selling, and insurers must verify completion.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9205. (a) A producer shall not solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with the insurer’s standards for product training. A producer may rely on insurer-provided product-specific training standards and materials to comply with this subdivision. (b) (1) A producer who is otherwise entitled to engage in the sale of annuity products shall complete a one-time eight-credit-hour annuity training course approved by the commissioner and provided by a commissioner-approved education provider, prior to commencing the transaction of annuities, pursuant to subdivision (a) of Section 1749.8. (2) In addition to the requirement set forth in paragraph (1), every producer who engages in this state in the sale of annuity products shall satisfactorily complete four continuing education credits prior to license renewal every two years, pursuant to subdivision (b) of Section 1749.8. (3) Producers who hold a life insurance line of authority prior to January 1, 2025, and who desire to sell annuities shall complete the requirements of this subdivision by July 1, 2025. Individuals who obtain a life insurance line of authority on or after January 1, 2025, shall not engage in the sale of annuities until the annuity training course required under this subdivision has been completed. (4) The training required under this subdivision shall include information on all of the following topics: (A) The types of annuities and various classifications of annuities. (B) Identification of the parties to an annuity. (C) How fixed, variable, and indexed annuity contract provisions affect consumers. (D) The application of income taxation of qualified and nonqualified annuities. (E) The primary uses of annuities. (F) Prohibited sales practices, the recognition of indicators that a prospective insured may lack the short-term memory or judgment to knowingly purchase an insurance product, and fraudulent and unfair trade practices, as well as replacement and disclosure requirements for sales of annuities, all as provided under California law, including, but not limited to, this article. (c) Providers of courses intended to comply with this section shall cover all topics listed for annuities in the prescribed outline and shall not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer’s products. Additional topics may be offered in conjunction with and in addition to the required outline. (d) A provider of an annuity training course intended to comply with this section shall register as a CE provider in this state and comply with the rules and guidelines applicable to producer continuing education courses as set forth in Section 1749.8 and subdivisions (d) and (e) of Section 1749.1, and in Sections 2188, 2188.1, 2188.2, 2188.3, 2188.4, 2188.50, 2188.6, 2188.7, 2188.8, and 2188.9 of Title 10 of the California Code of Regulations. (e) Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with Sections 2188.2 and 2188.3 of Title 10 of the California Code of Regulations. (f) Providers of annuity training shall comply with the reporting requirements and shall issue certificates of completion in accordance with Section 2188.8 of Title 10 of the California Code of Regulations. (g) An insurer shall verify that a producer has completed the annuity training required under this section before allowing the producer to sell an annuity for that insurer. An insurer may satisfy its responsibility under this paragraph by obtaining certificates of completion of the training course or obtaining reports provided by commissioner-sponsored database systems or vendors or from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance education providers. (Amended by Stats. 2025, Ch. 67, Sec. 132. (AB 1170) Effective January 1, 2026.)
  13. 10509.9206.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    An insurer must comply with this article. If a violation occurs, the commissioner may order corrective action and seek penalties or sanctions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9206. (a) An insurer is responsible for compliance with this article. If a violation occurs, either because of the action or inaction of the insurer or its producer, the commissioner may, in addition to any other available penalties, remedies, or administrative actions, order any or all of the following: (1) An insurer to take reasonably appropriate corrective action for any consumer harm caused by a violation of this article by the insurer, by its producer, or by its intermediary or by an entity that is contracted to perform the insurer’s supervisory duties. (2) A general agency, independent agency, or producer to take reasonably appropriate corrective action for any consumer harmed by the producer’s violation of this article. (3) Penalties and sanctions pursuant to Section 10509.9. For purposes of Section 10509.9, this article shall be deemed to be part of Article 8 (commencing with Section 10509), and the commissioner may in a single enforcement action seek penalties for a first and a second or subsequent violation. (b) Nothing in this article shall affect any obligation of an insurer for acts of its agents, or any consumer remedy or cause of action that is otherwise provided for. (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  14. 10509.9207.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    Certain insurers and related intermediaries must keep or provide to the commissioner records used to support insurance recommendations for five years after the transaction ends.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9207. (a) Insurers, general agents, independent agencies, and producers shall maintain or be able to make available to the commissioner records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for five years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of a producer. (b) Records required to be maintained by this article may be maintained in paper, photographic, microprocess, magnetic, mechanical, or electronic media, or by any process that accurately reproduces the actual document. (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  15. 10509.9208.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    The commissioner must adopt reasonable rules and regulations to administer this article, and may also adopt regulations that are not inconsistent with it.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9208. The commissioner shall, from time to time as conditions warrant, after notice and hearing, adopt reasonable rules and regulations, and amendments and additions thereto, as are necessary to administer this article. The commissioner may adopt regulations not inconsistent with this article pursuant to Section 989J of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203). (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  16. 10509.9209.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    A life insurer must give annuity buyers a buyer’s guide, delivered as a stand-alone document with the annuity or before delivery.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9209. (a) A life insurer shall provide to all consumers who purchase an annuity a buyer’s guide that shall be delivered as a stand-alone document with the annuity or before delivery of the annuity. (b) For the purposes of this section, “buyer’s guide” means the National Association of Insurance Commissioners’ approved Annuity Buyer’s Guide most relevant to the type of product being recommended. (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  17. 10509.9210.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. )

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    This article applies only to annuity sales or recommendations made on or after January 1, 2025.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 9.5. Suitability Requirements for Annuity Transactions on or after January 1, 2025 [10509.9200 - 10509.9210] ( Article 9.5 added by Stats. 2024, Ch. 2, Sec. 6. ) ## 10509.9210. This article shall apply only to sales or recommendations of annuities made on or after January 1, 2025. (Added by Stats. 2024, Ch. 2, Sec. 6. (SB 263) Effective January 1, 2025.)
  18. 10509.930.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. )

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    This section names the act as the Life Insurance Proceeds Disclosure Act of 2011 and says it may be cited by that name.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. ) ## 10509.930. This act shall be known and may be cited as the Life Insurance Proceeds Disclosure Act of 2011. (Added by Stats. 2011, Ch. 130, Sec. 1. (SB 713) Effective January 1, 2012.)
  19. 10509.931.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. )

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    The Legislature states that life insurance consumers should be able to know their payment options, including alternatives to a single death-benefit payment, so they can choose what best fits their needs.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. ) ## 10509.931. The Legislature finds and declares all of the following: (a) The occasion of the death of a spouse, parent, child, partner, or other loved one is a difficult time, accompanied by severe emotional stress, and is frequently a time of important and often difficult financial decisions. (b) Life insurance is intended to provide an important resource to support and ease financial decisions at such a time. (c) While life insurance policies may provide for a single payment of the death benefit, policies may also offer alternative payout options, including the use of a retained asset account. (d) The inherent difficulty of financial decisions at such a time may be eased if consumers know what their available payment options are so they can receive the benefit of available life insurance policy proceeds in the form best suited to their circumstances and needs. (Added by Stats. 2011, Ch. 130, Sec. 1. (SB 713) Effective January 1, 2012.)
  20. 10509.932.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. )

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    This section says the act’s purpose is to set disclosure standards for paying life insurance benefits to a beneficiary through a retained asset account in certain situations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. ) ## 10509.932. The purpose of this act is to establish disclosure standards regarding the payment of life insurance benefits to a beneficiary by means of a retained asset account if a life insurance company offers consumers a retained asset account or establishes such an account as an alternative to the receipt of insurance proceeds by a single payment made directly to the beneficiary that satisfies all of the benefits owed to the beneficiary. (Added by Stats. 2011, Ch. 130, Sec. 1. (SB 713) Effective January 1, 2012.)
  21. 10509.933.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. )

    Verify source ↗

    This section defines “insurer” and “retained asset account” for this article.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. ) ## 10509.933. For the purposes of this article, the following terms have the following definitions: (a) “Insurer” means an insurance company that delivers or issues for delivery in this state any policy of individual or group life insurance. (b) “Retained asset account” means any mechanism where the settlement of proceeds payable under a life insurance policy is accomplished by the insurer, or an entity acting on behalf of the insurer, by depositing the proceeds into an account with check or draft writing privileges, and where those proceeds are retained by the insurer, pursuant to a supplemental contract not involving annuity benefits. (Added by Stats. 2011, Ch. 130, Sec. 1. (SB 713) Effective January 1, 2012.)
  22. 10509.934.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. )

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    An insurer must give a life insurance beneficiary written information about settlement options and any other receipt-of-proceeds option when a claim is made.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. ) ## 10509.934. The insurer shall provide the beneficiary of life insurance proceeds, at the time a claim is made, written information describing the settlement options available under the policy and any other option available to the beneficiary for the receipt of proceeds, including retained asset accounts, and how to obtain specific details relevant to those options. If a retained asset account is one of the available options, the written information shall include all of the disclosures required by Section 10509.937. (Added by Stats. 2011, Ch. 130, Sec. 1. (SB 713) Effective January 1, 2012.)
  23. 10509.935.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. )

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    If an insurer settles life insurance benefits through a retained asset account, it must give the beneficiary a supplemental contract that clearly discloses the beneficiary’s rights and the insurer’s obligations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. ) ## 10509.935. If the insurer settles life insurance benefits through a retained asset account, the insurer shall provide the beneficiary with a supplemental contract that clearly discloses the rights of the beneficiary and the obligations of the insurer under the supplemental contract. (Added by Stats. 2011, Ch. 130, Sec. 1. (SB 713) Effective January 1, 2012.)
  24. 10509.936.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. )

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    If life insurance benefits are placed in a retained asset account, the insurer must send the beneficiary quarterly statements and also send a statement for any month with account activity other than interest crediting.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. ) ## 10509.936. If the life insurance benefits are placed in a retained asset account, the insurer shall send the beneficiary at least one statement per quarter, and a statement for any month in which there has been account activity other than just the crediting of interest. (Added by Stats. 2011, Ch. 130, Sec. 1. (SB 713) Effective January 1, 2012.)
  25. 10509.937.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. )

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    An insurer must give the beneficiary written disclosures before a retained asset account is set up, unless the disclosures were already provided under Section 10509.934.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. ) ## 10509.937. The insurer shall provide the following written disclosures to the beneficiary before the retained asset account is established, unless the insurer has already provided these disclosures pursuant to Section 10509.934: (a) Payment of the full benefit is accomplished by delivery of the draft book or checkbook. (b) One draft or check may be written to access the entire amount, including interest, of the retained asset account at any time. (c) Whether the available settlement options are preserved until the entire balance is withdrawn or the balance drops below the insurer’s minimum balance requirements. (d) A statement identifying the account as either a checking or draft account and an explanation of how the account works, including, but not limited to, any minimum check or draft amount requirements. (e) Information about the account services provided and contact information where the beneficiary may request and obtain more details about those services. (f) A description of any fees charged, if applicable. (g) The frequency of statements showing the current account balance, the interest credited, drafts or checks written, and any other account activity. The insurer shall send the beneficiary at least one statement per quarter, and a statement for any month in which there has been account activity other than just the crediting of interest. (h) The guaranteed minimum interest rate to be credited to the account, how the actual interest rate will be determined, and the actual interest rate that would be credited to a newly opened account as of the date the disclosure is issued. The actual interest rate may be disclosed by the insurer with the disclosures provided with the claim documents sent to the beneficiary, through a toll-free telephone number established by the insurer, or through the insurer’s Internet Web site. (i) That the interest earned on the account may be taxable. (j) Retained asset account funds held by insurance companies are not guaranteed by the Federal Deposit Insurance Corporation (FDIC), but are guaranteed by State Guaranty Associations, and that the State Guaranty Association coverage limits vary by state. (k) A statement that advises the beneficiary to contact the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) to learn more about the coverage limitations applicable to his or her account, and that provides the beneficiary with the current Internet Web site address and telephone number for NOLHGA. (l) A description of the insurer’s policy regarding retained asset accounts that become inactive, including the policy with respect to inactive accounts that are at risk of escheating to the state pursuant to the California Unclaimed Property Law (Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure). (Added by Stats. 2011, Ch. 130, Sec. 1. (SB 713) Effective January 1, 2012.)
  26. 10509.938.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. )

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    An insurer must comply with the requirements in this article, or it becomes subject to Article 6.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 11. Life Insurance Proceeds Disclosure Act of 2011 [10509.930 - 10509.938] ( Article 11 added by Stats. 2011, Ch. 130, Sec. 1. ) ## 10509.938. An insurer that fails to conform to the requirements provided under this article shall be subject to Article 6.5 (commencing with Section 790) of Chapter 1 of Part 2 of Division 1. (Added by Stats. 2011, Ch. 130, Sec. 1. (SB 713) Effective January 1, 2012.)
  27. 10509.940.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. )

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    This section says the act is called the Unclaimed Life Insurance and Annuities Act.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. ) ## 10509.940. This act shall be known and may be cited as the Unclaimed Life Insurance and Annuities Act. (Added by Stats. 2019, Ch. 286, Sec. 1. (SB 740) Effective January 1, 2020.)
  28. 10509.941.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. )

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    This article sets standards for identifying deceased individuals linked to possible life insurance or annuity benefits and for locating beneficiaries and giving them claim forms or instructions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. ) ## 10509.941. The purpose of this article is to provide standards for: (a) Identifying a deceased individual whose death may require an insurer to pay benefits or proceeds to beneficiaries in accordance with the terms of a life insurance policy, annuity contract, or retained asset account. (b) Locating beneficiaries of a deceased individual and providing appropriate claims forms or instructions to the beneficiaries to make a claim. (Added by Stats. 2019, Ch. 286, Sec. 1. (SB 740) Effective January 1, 2020.)
  29. 10509.942.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. )

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    This section defines key terms used in the article on unclaimed life insurance and annuities.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. ) ## 10509.942. For purposes of this article: (a) “Annuity contract” does not include an annuity used to fund an employment-based retirement plan or program if either of the following applies: (1) The insurer does not perform the recordkeeping services. (2) The insurer is not committed by the terms of the annuity contract to pay death benefits to the beneficiaries of specific plan participants. (b) “Asymmetric conduct” means an insurer’s use of the Death Master File before July 1, 2020, solely for purposes other than determining whether one of its insureds may be deceased in order to locate and pay beneficiaries. (c) “Beneficiary” or “beneficiaries” means the person or persons entitled or contingently entitled to receive the proceeds from a policy, an annuity contract, or a retained asset account. (d) “Death Master File” means the United States Social Security Administration’s Death Master File or any other database or service that is at least as comprehensive and accurate as the United States Social Security Administration’s Death Master File for determining that an individual has reportedly died. (e) “Death Master File match” means a search of the Death Master File that results in a match of the social security number, individual taxpayer identification number, or name and date of birth of an insured that is made and validated in accordance with the requirements of subdivision (a) of Section 10509.944. (f) “Insured” means an individual identified in a policy, retained asset account, or annuity contract whose death obligates the insurer to pay benefits or proceeds to a beneficiary or beneficiaries. (g) “Knowledge of death” means any of the following: (1) Receipt of an original or valid copy of a certified death certificate. (2) A Death Master File match. (3) Any other information in an insurer’s records from which the insurer should know that the insured has died. (h) “Lapse” means the termination of a policy resulting from nonpayment of premiums or, in the case of variable life and universal life insurance policies, the depletion of cash value below the amount needed to keep the policy in force. (i) “Policy” means a policy or certificate of life insurance that provides a death benefit. “Policy” does not include any of the following: (1) A policy or certificate of life insurance that provides a death benefit under an employee welfare benefit plan subject to the federal Employee Retirement Income Security Act of 1974 (ERISA) for which the insurer does not provide recordkeeping services, or under any federal employee benefit program. (2) A funeral insurance contract, as defined in Section 10240. (3) A policy or certificate of credit life insurance as defined in Section 779.2. (4) An accidental death or health policy, rider, or certificate, including, but not limited to, a disability or long-term care policy, rider, or certificate. (5) A joint and survivor annuity contract, if an annuitant is still living. (6) A policy issued to a group master policyholder for which the insurer does not provide recordkeeping services. (j) “Recordkeeping services” means circumstances under which an insurer has agreed with a group life insurance policyholder or contractholder to be responsible for obtaining, maintaining, and administering, in its own or its agents’ systems, at least all of the following information about each individual insured under an insured’s group insurance contract or a line of coverage: (1) Social security number, individual taxpayer identification number, or name and date of birth. (2) Beneficiary designation information. (3) Coverage eligibility. (4) Benefit amount. (5) Premium payment status. (k) “Records” means information regarding policies, annuity contracts, and retained asset accounts maintained in an insurer’s administrative systems or the administrative systems of a third party retained by the insurer. “Records” does not include information regarding policies, annuity contracts, and retained asset accounts maintained by a group life insurance policyholder or contractholder, or information that has been deleted from an insurer’s administrative system consistent with this act and the insurer’s record retention and destruction policies. (l) “Retained asset account” means a mechanism whereby the settlement of proceeds payable under a policy or individual annuity contract, including, but not limited to, the payment of cash surrender value, is accomplished by the insurer or an entity acting on behalf of the insurer establishing an account with check or draft writing privileges, if those proceeds are retained by the insurer, pursuant to a supplementary contract not involving annuity benefits. (m) “Retained asset accountholder” means the owner of a retained asset account or other person to file a claim for, or otherwise receive proceeds in accordance with the terms of, the retained asset account. (n) “Thorough search” means reasonable and good faith efforts, documented by an insurer, to identify a beneficiary, determine a current address for the beneficiary, and contact the beneficiary. (Added by Stats. 2019, Ch. 286, Sec. 1. (SB 740) Effective January 1, 2020.)
  30. 10509.943.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. )

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    This article applies to certain life insurance and annuity policies and retained asset accounts, subject to stated timing and issuer-location conditions and an exception for asymmetric conduct.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. ) ## 10509.943. (a) This article applies to an in-force policy, annuity contract, or retained asset account, a policy or annuity contract effective on or after July 1, 2020, and a policy that has lapsed on or after January 1, 2019, if the insurer has not engaged in asymmetric conduct. (b) This article applies to a policy, annuity contract, or retained asset account described in subdivision (a) if one of the following applies: (1) The insurer is domiciled in this state. (2) The policy, annuity contract, or retained asset account was issued or delivered in this state. (Added by Stats. 2019, Ch. 286, Sec. 1. (SB 740) Effective January 1, 2020.)
  31. 10509.944.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. )

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    Insurers must compare policies and accounts against the Death Master File, follow matching procedures, notify related entities, search for beneficiaries, and provide claim forms; they may not charge for the search or reduce beneficiary proceeds.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. ) ## 10509.944. (a) An insurer shall comply with the following requirements for performing a comparison of a policy, annuity contract, or retained asset account against the Death Master File: (1) An insurer that has engaged in asymmetric conduct shall compare all in-force policies, annuity contracts, and retained asset accounts and policies that have lapsed from the date it first used the Death Master File to July 1, 2020, against the complete Death Master File to identify potential matches of its insureds. (2) An insurer that has not engaged in asymmetric conduct shall compare all in-force policies, annuity contracts, and retained asset accounts and policies that have lapsed on or after January 1, 2019, against the complete Death Master File to identify potential matches of its insureds. (3) If an insurer meets one of the following criteria on July 1, 2020, the insurer is not required to conduct the comparison specified in paragraph (1) or (2) for any in-force policies: (A) The insurer has entered into a regulatory settlement agreement with the department regarding claims handling practices and the use of the Death Master File. (B) The insurer has received a targeted market conduct examination report issued by an insurance regulator for a multistate examination regarding claims handling practices and the use of the Death Master File, and the report did not find violations of law. (4) After an initial review as specified in paragraph (1) or (2), or if an insurer is exempted from paragraphs (1) and (2) pursuant to paragraph (3), an insurer shall compare all in-force policies, annuity contracts, and retained asset accounts and policies that have lapsed within the last 18 months against any updates to the Death Master File at least semiannually to identify potential matches of its insureds. If the insurer conducts a Death Master File search for policies, annuities, or retained asset accounts more frequently than semiannually, the insurer shall conduct a Death Master File search of all policies, annuities, or retained asset accounts with the same frequency. (5) (A) Except as provided in subparagraph (B), within six months of acquisition of a policy or annuity contract from another insurer, the acquiring insurer shall compare all newly acquired policies and annuity contracts that were not searched by the previous insurer against the complete Death Master File to identify potential matches of its insureds and annuitants. (B) Upon acquisition of a policy or annuity contract from another insurer, if the previous insurer has already conducted a search of the newly acquired policies and annuity contracts using the complete Death Master File, the acquiring insurer shall compare all newly acquired policies and annuity contracts using all of the Death Master File updates since the time the previous insurer conducted the complete search to identify potential matches of its insureds and annuitants. (6) In addition to accounting for exact matches of names, social security numbers, individual taxpayer identification numbers, and dates of birth of insureds, an insurer also shall conduct the comparisons required under this section following reasonable procedures that account for all of the following: (A) Common nicknames, initials used in lieu of a first or middle name, use of a middle name, compound first and middle names, and interchanged first and middle names. (B) Compound last names, surname given at birth or married names, and hyphens, blank spaces or apostrophes in last names. (C) Transposition of the month and date numerals in the date of birth. (D) Incomplete social security number or individual taxpayer identification number. (E) Common data entry errors that account for transposed numbers. (7) Upon identifying a potential match pursuant to this section, an insurer shall promptly make reasonable good faith efforts to validate the match by confirming the death of an insured. (b) (1) Upon receipt of information establishing knowledge of death of an insured, other than if an insurer has made a match pursuant to subdivision (a), the insurer shall check its records to determine whether the insurer has any other policies, annuity contracts, or retained asset accounts for that insured. (2) Upon receipt of information establishing knowledge of death of an insured the insurer shall do both of the following: (A) Notify each United States affiliate, parent, or subsidiary company of the insurer, as appropriate, and any entity with which the insurer contracts that may maintain or control records related to policies, annuity contracts, or retained asset accounts of the knowledge of death or match pursuant to subdivision (a). (B) Make a reasonable and good faith effort to ensure that each affiliate, parent, or subsidiary company of the insurer or other entity performs a check of their records to determine whether they have any other policies, annuity contracts, or retained asset accounts for that insured. (c) If an insurer has not been contacted by a beneficiary within 120 days of an insurer’s receipt of information establishing the insurer’s knowledge of death of an insured, the insurer shall conduct a thorough search, which shall be completed within one year from the date the insurer received that information. (d) An insurer may disclose the minimum necessary personal information about an insured or beneficiary to a person to whom the insurer reasonably believes may be able to assist the insurer to locate a beneficiary or a person otherwise entitled to payment of the proceeds. The insurer shall not implement policies or practices that may diminish the rights of, or amounts of proceeds due to, beneficiaries under its policies, annuity contracts, or retained asset accounts. (e) An insurer or its service provider may not charge a beneficiary or other authorized representative for any fees or costs associated with a Death Master File search or verification of a Death Master File match conducted pursuant to this section. (f) If the insurer locates a beneficiary, within 15 days after the date of location, the insurer shall provide appropriate claims forms or instructions to the beneficiary to make a claim if the insurer has not already received a claim from that beneficiary. (g) If an insurer fails to locate a beneficiary following a thorough search, the insurer shall report and remit the proceeds pursuant to Section 1515 of the Code of Civil Procedure. (h) (1) Except as provided in paragraph (2), at no later than the policy delivery or the establishment of an account, and upon a change of insured or beneficiary, an insurer shall request information from the insured sufficient to ensure that all benefits or proceeds are distributed to the appropriate persons upon the death of the insured, including, at a minimum, the name, address, date of birth, social security number or individual taxpayer identification number, and telephone number of every insured and beneficiary of a policy or account. (2) If an insurer issues a policy or provides an account based on information received directly from an insured’s employer, the insurer may obtain the beneficiary information described in paragraph (1) by communicating with the insured after the insurer’s receipt of the information from the insured’s employer. (Added by Stats. 2019, Ch. 286, Sec. 1. (SB 740) Effective January 1, 2020.)
  32. 10509.945.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. )

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    Violating a requirement of this article knowingly or repeatedly can be treated as an unfair and deceptive act.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. ) ## 10509.945. (a) Failure to meet a requirement of this article knowingly or with such frequency as to constitute a general practice is an unfair and deceptive act pursuant to Section 790.03. (b) This article does not create or imply a private right of action for a violation of this article. (c) Unless otherwise expressly provided, the remedies or penalties provided for by this article are cumulative to each other and to the remedies or penalties available under all other laws. (Added by Stats. 2019, Ch. 286, Sec. 1. (SB 740) Effective January 1, 2020.)
  33. 10509.946.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. )

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    This section says the article is severable: if one provision or its application is invalid, the rest can still stand if they work without it.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946] ( Chapter 5 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 12. Unclaimed Life Insurance and Annuities Act [10509.940 - 10509.946] ( Article 12 added by Stats. 2019, Ch. 286, Sec. 1. ) ## 10509.946. The provisions of this article are severable. If any provision of this article 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. 2019, Ch. 286, Sec. 1. (SB 740) Effective January 1, 2020.)
  34. 10509.950.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    This chapter governs life insurance policy illustrations and aims to keep them understandable and not misleading.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.950. In order to protect consumers and foster consumer education, this chapter shall govern the regulation of life insurance policy illustrations. It is the intent of the Legislature in enacting this chapter to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable by providing illustration formats, prescribing standards to be followed when illustrations are used, and specifying the disclosures that are required in connection with illustrations. Insurers should, as far as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that is understandable by a typical person within the segment of the public to which the illustration is directed. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  35. 10509.952.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    This chapter applies to all group and individual life insurance policies and certificates, except for the listed exclusions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.952. This chapter shall apply to all group and individual life insurance policies and certificates except as follows: (a) Variable life insurance. (b) Individual and group annuity contracts. (c) Credit life insurance. (d) Life insurance policies with no illustrated death benefits on any individual exceeding ten thousand dollars ($10,000). (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  36. 10509.953.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    This section defines terms used in life insurance policy illustration rules, including “illustration,” “disciplined current scale,” and related insurance terms.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.953. As used in this chapter: (a) “Actuarial Standards Board” means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice. (b) “Contract premium” means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration. (c) “Currently payable scale” means a scale of nonguaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days. (d) “Disciplined current scale” means a scale of nonguaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the Actuarial Standards Board may be relied upon if the standards meet all of the following: (1) Have not been found to be inconsistent with the provisions of this chapter by the commissioner after a hearing held in accordance with Sections 11500 to 11530, inclusive, of the Government Code. (2) Limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred. (3) Do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date. (4) Do not permit assumed expenses to be less than minimum assumed expenses. (e) “Generic name” means a short title descriptive of the policy being illustrated such as whole life, “term life” or “flexible premium adjustable life.” (f) “Guaranteed elements” means the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue. (g) “Illustrated scale” means a scale of nonguaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of either of the following: (1) The disciplined current scale. (2) The currently payable scale. (h) “Illustration” means a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years and that is one of the three types defined below: (1) “Basic illustration” means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements. (2) “Supplemental illustration” means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this regulation, and that may be presented in a format differing from the basic illustration, but may only depict a scale of nonguaranteed elements that is permitted in a basic illustration. (3) “In force illustration” means an illustration furnished at any time after the policy that it depicts has been in force for one year or more. (i) “Illustration actuary” means an actuary meeting the requirements of Section 10509.960 who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board. (j) “Lapse-supported illustration” means an illustration of a policy form failing the test of self-supporting as defined in this chapter, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100 percent policy persistency thereafter. (k) “Life insurance” means insurance upon the lives of persons or appertaining thereto. (l) (1) “Minimum assumed expenses” means the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from all of the following: (A) Fully allocated expenses. (B) Marginal expenses. (C) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the commissioner. (2) Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used. (m) “Non-guaranteed elements” means the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue. (n) “Non-term group life” means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group that includes all of the following: (1) Every plan of coverage was selected by the employer or other group representative. (2) Some portion of the premium is paid by the group or through payroll deduction. (3) Group underwriting or simplified underwriting is used. (o) “Policy owner” means the owner named in the policy or the certificate holder in the case of a group policy. (p) “Premium outlay” means the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket. (q) “Self-supporting illustration” means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the 15th policy anniversary or the 20th policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash-flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner’s election. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  37. 10509.954.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    Insurers subject to this chapter must tell the commissioner whether each policy form will be marketed with or without an illustration, and certain illustration use is restricted.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.954. (a) Each insurer marketing policies to which this chapter is applicable shall notify the commissioner whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on the effective date of this chapter, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after the effective date of this chapter, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the commissioner. (b) If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited. (c) If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this chapter is required, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered. (d) Potential enrollees of nonterm group life subject to this chapter shall be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and nonguaranteed basis appropriate to the group and the coverage. This quotation shall not be considered an illustration for purposes of this chapter, but all information provided shall be consistent with the illustrated scale. A basic illustration shall be provided at delivery of the certificate to enrollees for nonterm group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer shall make a basic illustration available to any nonterm group life enrollee who requests it. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  38. 10509.955.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    When an illustration is used to sell a life insurance policy, the insurer, its producers, and other authorized representatives must not make misleading or unsupported claims, must not use incomplete or noncompliant illustrations, and must avoid certain “vanishing” or lapse-supported illustration practices except as stated.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.955. (a) An illustration used in the sale of a life insurance policy shall satisfy the applicable requirements of this chapter, be clearly labeled “life insurance illustration,” and include, but not be limited to, the following information: (1) Name of insurer. (2) Name and business address of producer or insurer’s authorized representative, if any. (3) Name, age and sex of proposed insured, except where a composite illustration is permitted under this chapter. (4) Underwriting or rating classification upon which the illustration is based. (5) Generic name of the policy, the company product name, if different, and form number. (6) Initial death benefit. (7) Dividend option election or application of nonguaranteed elements, if applicable. (b) When using an illustration in the sale of a life insurance policy, an insurer or its producers or other authorized representatives shall not do any of the following: (1) Represent the policy as anything other than a life insurance policy. (2) Use or describe nonguaranteed elements in a manner that is misleading or has the capacity or tendency to mislead. (3) State or imply that the payment or amount of nonguaranteed elements is guaranteed. (4) Use an illustration that does not comply with the requirements of this chapter. (5) Use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated. (6) Provide an applicant with an incomplete illustration. (7) Represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact. (8) Use the term “vanishing” or “vanishing premium,” or a similar term that implies the policy becomes paid up, to describe a plan for using nonguaranteed elements to pay a portion of future premiums. (9) Except for policies that can never develop nonforfeiture values, use an illustration that is “lapse-supported.” (10) Use an illustration that is not “self-supporting.” (c) If an interest rate used to determine the illustrated nonguaranteed elements is shown, it shall not be greater than the earned interest rate underlying the disciplined current scale. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  39. 10509.956.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    Basic life insurance illustrations must follow specific formatting and disclosure rules, and the applicant or policy owner and the insurer’s representative must sign required statements.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.956. (a) A basic illustration shall conform with the following requirements: (1) The illustration shall be labeled with the date on which it was prepared. (2) Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the illustration. (3) The assumed dates of payment receipt and benefit payout within a policy year shall be clearly identified. (4) If the age of the proposed insured is shown as a component of the tabular detail, it shall be issue age plus the numbers of years the policy is assumed to have been in force. (5) The assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments shall be identified as premiums outlay. (6) Guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium shall be shown and clearly labeled guaranteed. (7) If the illustration shows any nonguaranteed elements, they cannot be based on a scale more favorable to the policy owner than the insurer’s illustrated scale at any duration. These elements shall be clearly labeled nonguaranteed. (8) The guaranteed elements, if any, shall be shown before corresponding nonguaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the nonguaranteed elements. (9) The account or accumulation value of a policy, if shown, shall be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender. (10) The value available upon surrender shall be identified by the name this value is given in the policy being illustrated and shall be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans, and policy loan interest, as applicable. (11) Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form. (12) Any illustration of nonguaranteed elements shall be accompanied by a statement indicating that: (A) The benefits and values are not guaranteed. (B) The assumptions on which they are based are subject to change by the insurer. (C) Actual results may be more or less favorable. (13) If the illustration shows that the premium payer may have the option to allow policy charges to be paid using nonguaranteed values, the illustration shall clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure shall be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display shall not be left blank or show zero unless accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up. (14) If the applicant plans to use dividends or policy values, guaranteed or nonguaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values. (b) A basic illustration shall include all of the following: (1) A brief description of the policy being illustrated, including a statement that it is a life insurance policy. (2) A brief description of the premium outlay or contract premium, as applicable, for the policy. For a policy that does not require payment of a specific contract premium, the illustration shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code. (3) A brief description of any policy features, riders or options, guaranteed or nonguaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy. (4) Identification and a brief definition of column headings and key terms used in the illustration. (5) A statement as follows: “This illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown.” (c) (1) Following the narrative summary, a basic illustration shall include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. For a policy that provides for a contract premium, the guaranteed death benefits and values shall be based on the contract premium. This summary shall be shown for at least policy years 5, 10, and 20 and at age 70, if applicable, on the three bases shown below. For multiple life policies the summary shall show policy years 5, 10, 20, and 30. (A) Policy guarantees. (B) Insurer’s illustrated scale. (C) Insurer’s illustrated scale used but with the nonguaranteed elements reduced as follows: (i) Dividends at 50 percent of the dividends contained in the illustrated scale used. (ii) Nonguaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used. (iii) All nonguaranteed charges, including but not limited to, term insurance charges, mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used. (2) In addition, if coverage would cease prior to policy maturity or age 100, the year in which coverage ceases shall be identified for each of the three bases. (d) Statements substantially similar to the following shall be included on the same page as the numeric summary and signed by the applicant, or the policy owner in the case of an illustration provided at time of delivery, as required in this chapter. (1) A statement to be signed and dated by the applicant or policy owner reading as follows: “I have received a copy of this illustration and understand that any nonguaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed.” (2) A statement to be signed and dated by the insurance producer or other authorized representative of the insurer reading as follows: “I certify that this illustration has been presented to the applicant and that I have explained that any nonguaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration.” (e) (1) A basic illustration shall include the following information for at least each policy year from 1 to 10 and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and except for term insurance beyond the 20th year, for any year in which the premium outlay and contract premium, if applicable, is to change: (A) The premium outlay and mode the applicant plans to pay and the contract premium, as applicable. (B) The corresponding guaranteed death benefit, as provided in the policy. (C) The corresponding guaranteed value available upon surrender, as provided in the policy. (2) For a policy that provides for a contract premium, the guaranteed death benefit and value available upon surrender shall correspond to the contract premium. (3) Nonguaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer’s current practice is to pay terminal dividends. If any nonguaranteed elements are shown they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a nonguaranteed benefit or value is shown, a zero shall be displayed in the guaranteed column. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  40. 10509.957.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    A supplemental illustration may be used only if it is attached to or paired with a compliant basic illustration and meets several consistency and notice requirements.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.957. (a) A supplemental illustration may be provided if it meets all of the following requirements: (1) It is appended to, accompanied by, or preceded by a basic illustration that complies with this chapter. (2) The nonguaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration. (3) It contains the same statement as required of a basic illustration under subdivision (d) of Section 10509.956 that nonguaranteed elements are not guaranteed. (4) For a policy that has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration shall be equal to the premium outlay shown in the basic illustration. (b) The supplemental illustration shall include a notice referring to the basic illustration for guaranteed elements and other important information. (c) If cost indices are required by Chapter 5.6 (commencing with Section 10509.970), they may be provided by means of a supplemental illustration or included in the basic illustration. Those indices shall be based on nonguaranteed elements calculated according to the standards required in this chapter. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  41. 10509.958.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    This section requires insurers, producers, applicants, and policy owners to exchange, sign, submit, and keep life insurance policy illustrations and related certifications at specified times.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.958. (a) (1) If a basic illustration is used by an insurance producer or other authorized representative of the insurer in the sale of a life insurance policy and the policy is applied for as illustrated, a copy of that illustration, signed in accordance with this chapter, shall be submitted to the insurer at the time of the policy application. A copy also shall be provided to the applicant. (2) If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued shall be sent with the policy. The revised illustration shall conform to the requirements of this chapter, shall be labeled “Revised Illustration” and shall be signed and dated by the applicant or policy owner and producer or other authorized representative of the insurer no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner. (b) (1) If no illustration is used by an insurance producer or other authorized representative in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the producer or representative shall certify to that effect in writing on a form provided by the insurer. On the same form the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and shall further acknowledge an understanding that an illustration conforming to the policy as issued will be provided no later than at the time of policy delivery. This form shall be submitted to the insurer at the time of policy application. (2) If the policy is issued, a basic illustration conforming to the policy as issued shall be sent with the policy and signed by the policy owner no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner. (c) If the basic illustration or revised illustration is sent by the insurer to the applicant or policy owner by mail, it shall include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page of the illustration for the policy issued and return the signed copy to the insurer. The insurer’s obligation under this subdivision shall be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the numeric summary page. The requirement to make a diligent effort shall be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page. (d) A copy of the basic illustration and a revised basic illustration, if any, signed as applicable, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, shall be retained by the insurer until three years after the policy is no longer in force. A copy need not be retained if no policy is issued. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  42. 10509.959.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    An insurer must give each policy owner an annual policy-status report, and must provide an in force illustration when the policy owner requests one.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.959. (a) In the case of a policy designated as one for which illustrations will be used, the insurer shall provide each policy owner with an annual report on the status of the policy that shall include, but not be limited to, the following information: (1) For universal life policies, the report shall include the following: (A) The beginning and end date of the current report period. (B) The policy value at the end of the previous report period and at the end of the current report period. (C) The total amounts that have been credited or debited to the policy value during the current report period, identifying each by type, including, but not limited to, interest, mortality, expense and riders. (D) The current death benefit at the end of the current report period on each life covered by the policy. (E) The net cash surrender value of the policy as of the end of the current report period. (F) The amount of outstanding loans, if any, as of the end of the current report period. (G) For fixed premium policies: If, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy’s net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report. (H) For flexible premium policies: If, assuming guaranteed interest, mortality and expense loads, the policy’s net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report. (2) For all other policies, the report shall include the following, where applicable: (A) Current death benefit. (B) Annual contract premium. (C) Current cash surrender value. (D) Current dividend. (E) Application of current dividend. (F) Amount of outstanding loan. (3) Insurers writing life insurance policies that do not build nonforfeiture values shall only be required to provide an annual report with respect to these policies for those years when a change has been made to nonguaranteed policy elements by the insurer. (b) If the annual report does not include an in force illustration, it shall contain the following notice displayed prominently: “IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling [insurer’s phone number], writing to [insurer’s address] or contacting your agent. If you do not receive a current illustration of your policy within thirty days from your request, you should contact your state insurance department.” The insurer may vary the sequential order of the methods for obtaining an in force illustration. (c) Upon the request of the policy owner, the insurer shall furnish an in force illustration of current and future benefits and values based on the insurer’s present illustrated scale. This illustration shall comply with the requirements of subdivisions (a) and (b) of Section 10509.955 and subdivisions (a) and (e) of Section 10509.956. No signature or other acknowledgment of receipt of this illustration shall be required. (d) If an adverse change in nonguaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report shall contain a notice of that fact and the nature of the change prominently displayed. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  43. 10509.960.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    Insurers must appoint illustration actuaries, and illustration actuaries must make certifications, disclosures, filings, and prompt notices to the board and commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.960. (a) The board of directors of each insurer shall appoint one or more illustration actuaries. (b) The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations promulgated by the Actuarial Standards Board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this chapter. (c) The illustration actuary shall comply with all of the following: (1) Be a member in good standing of the American Academy of Actuaries. (2) Be familiar with the standard of practice regarding life insurance policy illustrations. (3) Not been found by the commissioner, following appropriate notice and hearing, to have engaged in or committed any of the following acts: (A) Violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as an illustration actuary. (B) Been found guilty of fraudulent or dishonest practices. (C) Demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary. (D) Resigned or been removed as an illustration actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards. (4) Notify the commissioner of any acts engaged in or committed in another state that are similar to those described in paragraph (3). (5) Disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. Nonguaranteed elements illustrated for new policies that are not consistent with those illustrated for similar in force policies shall be disclosed in the annual certification. Nonguaranteed elements illustrated for both new and in force policies that are not consistent with the nonguaranteed elements actually being paid, charged or credited to the same or similar forms shall be disclosed in the annual certification. (6) Disclose in the annual certification the method used to allocate overhead expenses for all illustrations including: (A) Fully allocated expenses. (B) Marginal expenses. (C) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the commissioner. (d) (1) The illustration actuary shall file a certification with the board of directors of the insurer and with the commissioner as follows: (A) Annually for all policy forms for which illustrations are used. (B) Before a new policy form is illustrated. (2) If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the commissioner promptly. (e) If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the commissioner promptly of his or her inability to certify. (f) A responsible officer of the insurer, other than the illustration actuary, shall certify annually the following: (1) The illustration formats meet the requirements of this chapter and the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary. (2) The company provided its agents with information about the expense allocation method used by the company in its illustrations and complied with the disclosure requirements of paragraph (6) of subdivision (c). (g) The annual certifications shall be provided to the commissioner each year by a date determined by the insurer. (h) If an insurer changes the illustration actuary responsible for all or a portion of the company’s policy forms, the insurer shall notify the commissioner of that fact promptly and disclose the reason for the change. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  44. 10509.961.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    If an insurer or producer violates any provision of this chapter, it is subject to Section 790.06, in addition to any other penalties provided by law.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.961. In addition to any other penalties provided by law, an insurer or producer that violates any provision of this chapter shall be subject to Section 790.06. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  45. 10509.962.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    This chapter is severable: if one provision or its application is invalid, the rest can still operate if they can be given effect without the invalid part.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.962. The provisions of this chapter are severable. If any provision of this chapter 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. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  46. 10509.963.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    If the commissioner believes an insurer violated this chapter, the commissioner may request specified examples, and the insurer must file them.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.963. If the commissioner has reason to believe that any insurer has violated this chapter, the commissioner may request and the insurer shall file both of the following: (a) An example of the annual report to the policy owner with notice of adverse change in nonguaranteed elements. (b) An example of an illustration. (Amended by Stats. 1997, Ch. 17, Sec. 89. Effective January 1, 1998.)
  47. 10509.964.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    The commissioner’s review of illustrations and related materials under this chapter is subject to Section 736.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.964. Review by the commissioner of illustrations, supporting materials, certifications, and any and all other materials prepared pursuant to this chapter shall be subject to Section 736. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)
  48. 10509.965.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. )

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    This chapter takes effect on and after July 1, 1997, and applies to policies sold on or after that date.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.5. Life Insurance Policy Illustrations [10509.950 - 10509.965] ( Chapter 5.5 added by Stats. 1996, Ch. 1106, Sec. 1. ) ## 10509.965. This chapter shall become effective on and after July 1, 1997, and shall apply to policies sold on or after that date. (Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Note: This section prescribes a delayed effective (operative) date of July 1, 1997, for Chapter 5.5, commencing with Section 10509.950.)
  49. 10509.970.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. )

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    This chapter’s purpose is to require life-insurance cost comparisons over years to include a presentation that recognizes the time value of money.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. ) ## 10509.970. It is the purpose of this chapter to assure prospective purchasers of life insurance that, when a presentation is made showing or comparing the cost of life insurance over a period of years which does not recognize the time value of money, it shall be accompanied by a presentation which recognizes the time value of money. (Added by Stats. 1996, Ch. 1106, Sec. 2. Effective January 1, 1997.)
  50. 10509.971.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. )

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    When life insurance is sold and a presentation compares costs without recognizing the time value of money, the agent or insurer must also show specified cost indexes and calculate them for 10-year and 20-year periods.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. ) ## 10509.971. (a) If, in connection with the selling of life insurance to which this chapter applies, an agent or insurer makes a presentation showing or comparing the cost of life insurance over a period of years which does not recognize the time value of money, the agent or insurer shall at the same time present the Life Insurance Surrender Cost Index and the Life Insurance Net Payment Cost Index which shall be calculated for both a 10-year and a 20-year period. (b) An agent or insurer may use any other system or form of presentation for comparing the cost of life insurance over a period of years which recognizes the time value of money, including the Life Insurance Surrender Cost Index and the Life Insurance Net Payment Cost Index computed at an interest rate other than 5 percent. (c) If the Life Insurance Surrender Cost Index or the Life Insurance Net Payment Cost Index is used, it need not be provided for a period which extends beyond the end of the premium payment period for the plan. The Life Insurance Surrender Cost Index and the Life Insurance Net Payment Cost Index shall be accompanied by an explanation substantially to the effect that the Life Insurance Surrender Cost Index and the Life Insurance Net Payment Cost Index are measures of the relative cost of similar plans of insurance, and that a low index number represents a lower cost than a higher index number. (Added by Stats. 1996, Ch. 1106, Sec. 2. Effective January 1, 1997.)
  51. 10509.972.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. )

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    This section sets formulas for calculating life insurance surrender cost indexes and net payment cost indexes.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. ) ## 10509.972. (a) The Life Insurance Surrender Cost Index for level premium plans of insurance shall be calculated by applying the steps in the following paragraphs: (1) Select either a 10-year or a 20-year period, commencing with the first year of the policy, over which the analysis is to be made. (2) Determine the cash surrender value, and terminal dividend, if any, available at the end of the period selected. (3) For participating policies, accumulate the annual cash dividends at 5 percent interest compounded annually to the end of the period selected and add this accumulation to the amount in paragraph (2). (4) Divide the amount in paragraph (3), or the amount in paragraph (2) for nonparticipating policies, by an interest factor that converts it into a level annual amount accruing over the period selected in paragraph (1). If the period is 10 years, this factor is 13.207, and if the period is 20 years, the factor is 34.719. (5) Subtract the amount in paragraph (4) from the annual premium payable. (6) Divide the amount in paragraph (5) by the number of thousands of the amount of insurance to arrive at the Life Insurance Surrender Cost Index. (b) The Life Insurance Surrender Cost Index for plans of insurance with premiums which are not level shall be calculated as follows: (1) Select either a 10-year or a 20-year period, commencing with the first year of the policy, over which the analysis is to be made. (2) Determine the cash surrender value, and terminal dividend, if any, available at the end of the period selected. (3) For participating policies, accumulate the annual cash dividends at 5 percent interest compounded annually to the end of the period selected and add this accumulation to the amount in paragraph (2). (4) Divide the amount in paragraph (3), or the amount in paragraph (2) for nonparticipating policies, by an interest factor that converts it into a level annual amount accruing over the period selected in paragraph (1). If the period is 10 years, this factor is 13.207, and if the period is 20 years, the factor is 34.719. (5) Subtract the amount in paragraph (4) from the equivalent level premium determined by accumulating the annual premium payable at 5 percent interest compounded annually to the end of the period in paragraph (1) and dividing the result by the factor stated in paragraph (4). (6) Divide the amount in paragraph (5) by the number of thousands of the amount of insurance to arrive at the Life Insurance Surrender Cost Index. (c) For plans of insurance where the amount of insurance is not level, the amount of insurance in paragraph (6) of subdivision (a) and paragraph (6) of subdivision (b) shall be calculated as follows: (1) Accumulate the amount payable upon death, regardless of the cause of death, at the beginning of each policy year at 5 percent interest compounded annually to the end of the period selected in paragraph (1) of subdivision (a) or paragraph (1) of subdivision (b). (2) Divide the amount in paragraph (1) by an interest factor that converts it into a level amount of insurance that, if paid at the beginning of each year, would accrue to the amount of paragraph (1) over the period selected in paragraph (1) of subdivision (a) or paragraph (1) of subdivision (b). If this period is 10 years, this factor is 13.207, and if the period is 20 years, the factor is 34.719. (d) The Life Insurance Net Payment Cost Index is calculated in the same manner as the comparable Life Insurance Surrender Cost Index except that the cash surrender value and any terminal dividend are set at zero. (Added by Stats. 1996, Ch. 1106, Sec. 2. Effective January 1, 1997.)
  52. 10509.973.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. )

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    Insurance cost comparisons must be cautious, limited to similar plans, and not used in a way that hides actual premiums or benefits.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. ) ## 10509.973. Any comparison must be used with caution and should not be emphasized to the point that actual premiums and policy benefits are overshadowed. Only similar plans of insurance should be compared. Any dividend or nonguaranteed element used in calculating the Life Insurance Surrender Cost Index or the Life Insurance Net Payment Cost Index shall be based on nonguaranteed elements calculated according to the standards required in Chapter 5.5 (commencing with Section 10509.950). With respect to participating policies, care must be taken to describe the policy dividend as a refund or return of part of the premium paid, which is not guaranteed and which is dependent on the investment earnings, mortality experience, and expense experience of the insurer. (Added by Stats. 1996, Ch. 1106, Sec. 2. Effective January 1, 1997.)
  53. 10509.974.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. )

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    This chapter applies to solicitation, negotiation, or procurement of life insurance in this state, except for listed insurance types and certain policies over $10,000 in illustrated death benefits.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. ) ## 10509.974. (a) Except as provided in subdivision (b), this chapter shall apply to any solicitation, negotiation, or procurement of life insurance occurring within this state. (b) This chapter shall not apply to: (1) Variable life insurance. (2) Individual and group annuity contracts. (3) Credit life insurance. (4) Life insurance policies with no illustrated death benefits on any individual exceeding ten thousand dollars ($10,000). (5) Franchise life insurance. (6) Group term life insurance. (7) Life insurance policies issued in connection with pension and welfare plans as defined by and subject to the federal Employee Retirement Income Security Act (29 U.S.C. Sec. 1001 and following), as amended. (Amended by Stats. 1998, Ch. 379, Sec. 2. Effective January 1, 1999.)
  54. 10509.975.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. )

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    A life insurer must give prospective insureds a buyer’s guide before taking the applicant’s initial premium or premium deposit.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 5.6. Life Insurance Cost Indexes [10509.970 - 10509.975] ( Chapter 5.6 added by Stats. 1996, Ch. 1106, Sec. 2. ) ## 10509.975. (a) A life insurer shall provide to all prospective insureds a buyer’s guide prior to accepting the applicant’s initial premium or premium deposit. However, if the policy for which application is made contains an unconditional refund provision of at least 10 days, the buyer’s guide shall be delivered with the policy or prior to delivery of the policy. (b) For the purposes of this chapter, a buyer’s guide is a document that contains, and is limited to, the current buyer’s guide recommended for use by the National Association of Insurance Commissioners. (Amended by Stats. 1997, Ch. 17, Sec. 90. Effective January 1, 1998.)
  55. 1051.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    The court must notify the commissioner and shareholder-petitioners, decide whether to approve, disapprove, or modify the mutualization plan, and appoint appraisers if the plan is approved or modified.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1051. After the expiration of the time fixed in the order provided for in section 1050, and upon the filing of such petition, said court shall direct notice of a hearing of said petitions to be given to the commissioner and to such petitioners as are shareholders of such insurer. At such hearing, all petitions for the disapproval and all petitions for the modification of said mutualization plan shall be given precedence over all petitions for the appointment of one or more appraisers. Upon hearing of all such petitions for the disapproval and for the modification of said mutualization plan, said court shall either approve said mutualization plan or disapprove it or modify it in such manner and to such extent, not inconsistent with the provisions of this article, as to said court shall seem appropriate. In the event of the disapproval of said mutualization plan the court shall deny all petitions for the appointment of one or more appraisers. In the event of the approval or modification of said mutualization plan, the court shall, upon hearing of the petitions for the appointment of appraisers, appoint one or more appraisers, who shall appraise the then outstanding shares of the capital stock of such insurer, without regard to any appreciation or depreciation arising out of said mutualization plan as so approved or modified. Such appraisement shall fix the reasonable value of such shares of capital stock, including the goodwill, if any, of such insurer, and shall state the value, if any, assigned to such goodwill; and if the appraisers shall have found that such insurer has no goodwill, such finding shall be stated. Such appraisement, when confirmed by said court, shall be final and conclusive. (Amended by Stats. 1935, Ch. 291.)
  56. 10510.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital [10510 - 10512] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    An incorporated life insurer issuing reserve-basis policies may not transact life insurance in this state unless it has at least $2,250,000 in paid-in capital plus the surplus required by the cited sections.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital [10510 - 10512] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 10510. An incorporated life insurer issuing policies on the reserve basis shall not transact life insurance in this state unless it has a paid-in capital of at least two million two hundred fifty thousand dollars ($2,250,000) plus the surplus required by Section 700.02 and Section 700.05. (Amended by Stats. 1989, Ch. 418, Sec. 3.)
  57. 10511.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital [10510 - 10512] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    An incorporated life insurer may add certain insurance classes beyond life insurance if its charter allows it, Section 700.03 does not bar it, and its paid-in capital exceeds the stated capital amounts.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital [10510 - 10512] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 10511. If authorized by its charter, such an incorporated life insurer may, except as provided in Section 700.03, transact, in addition to life insurance, any of the following classes of insurance if its total paid-in capital is at least two million two hundred fifty thousand dollars ($2,250,000) in excess of the sum of the amounts set forth opposite the classes of insurance transacted: Number and name of class Amount of capital class transacted to be added 6. Disability ........................ 250,000 8. Liability 9. Workers’ compensation 10. Common carrier liability ⎫ _____ ⎪ _____ ⎬ ........................ ⎪ _____ ⎭ _____ 300,000 for all or any of them (Amended by Stats. 1989, Ch. 418, Sec. 4.)
  58. 10512.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital [10510 - 10512] ( Article 1 enacted by Stats. 1935, Ch. 145. )

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    Some life insurers must follow older capital rules until December 31, 1999, and after that must meet the capital requirements of Sections 10510 and 10511.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 1. Capital [10510 - 10512] ( Article 1 enacted by Stats. 1935, Ch. 145. ) ## 10512. An insurer holding a certificate of authority for life insurance and any other proper class on December 31, 1989, shall be governed by the provisions of Section 700.05, 10510, and 10511 in effect on December 31, 1989, until December 31, 1999. After December 31, 1999, any insurer holding a certificate of authority for life insurance and any other proper class shall meet the capital requirement of Sections 10510 and 10511 as become effective January 1, 1990. (Amended by Stats. 1989, Ch. 418, Sec. 5.)
  59. 1052.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    The commissioner must pay shareholders the value of surrendered shares, appoint directors with court approval, and transfer the insurer’s property and records under a court order, with a limited right to retain property as a deposit for costs.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1052. Thereupon the commissioner shall: (a) Pay to each of such shareholders or his assignee or nominee, upon surrender of the shares held by such shareholder, the value of said shares so ascertained; subject, however, to the restrictions of subdivisions (d) and (e) of section 1047, and subject, also, to the terms and conditions of the mutualization plan as approved or modified. (b) Appoint, with the approval of the court, the requisite number of directors in whom shall thereafter be vested the control and management of the assets and business of such insurer until their successors shall have been elected and qualified. (c) Transfer, upon the order of said court, to the appropriate officers appointed by such directors, the property, real and personal, and the books, records, accounts and papers of such insurer; provided, however, that the commissioner may retain, as a deposit, so much of such property as he deems necessary to defray additional costs and expenses incurred or to be incurred in connection with any proceeding under this article affecting such property or business. (Amended by Stats. 1935, Ch. 291.)
  60. 1053.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    When the directors are appointed under section 1052(b), the old directors lose office, shareholders lose voting rights, and the insurer becomes a mutual life insurer.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1053. Immediately upon the appointment of the directors as provided in subdivision (b) of section 1052, the directors theretofore holding office shall cease to hold office, and all rights of the shareholders of such insurer to vote at any meeting of such insurer shall absolutely cease and such shareholders shall retain only such interest in such corporation or in the property or assets thereof as shall be provided in said mutualization plan, and such insurer shall thereupon be and become a mutual life insurer under such corporate name as may have been set forth in its charter, as amended, to be conducted not for profit, but solely for the mutual benefit, ratably, of all its policyholders, and shall, upon issuance to it by the commissioner of a certificate of authority, have power to issue nonassessable policies on a reserve basis subject to all provisions of law applicable to incorporated life insurers issuing nonassessable policies on a reserve basis, but shall be exempt from the provisions of Chapter 7, Part 2, Division 2 of this code. (Amended by Stats. 1935, Ch. 291.)
  61. 10530.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Dividends [10530- 10530.] ( Article 2 enacted by Stats. 1935, Ch. 145. )

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    A reserve-plan domestic life insurer may pay dividends only from earned surplus, and certain unrealized or asset-exchange surplus cannot be used until realized or cash-realizable; otherwise-prohibited dividends need policyholder-surplus tests and prior commissioner approval.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 2. Dividends [10530- 10530.] ( Article 2 enacted by Stats. 1935, Ch. 145. ) ## 10530. (a) A domestic incorporated life insurer issuing policies on the reserve plan shall not make any dividends, except from earned surplus. (b) No dividends shall be declared out of earned surplus derived from the mere appreciation in the value of assets not yet realized, nor shall any dividends be declared from any part of earned surplus derived from an exchange of assets, unless and until earned surplus has been realized, or unless the assets received are currently realizable in cash. (c) An insurer may declare and distribute a dividend otherwise prohibited by this section if (1) following payment of the dividend the insurer’s surplus as regards policyholders is (A) reasonable in relation to its outstanding liabilities and (B) adequate to its financial needs as prescribed in Section 1215.5, and (2) the commissioner has given approval for the dividend prior to payment. (d) For purposes of this section, “earned surplus” means unassigned funds, as required to be reported on the insurer’s annual statement. (Amended by Stats. 1993, Ch. 974, Sec. 5. Effective January 1, 1994.)
  62. 1054.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    After mutualization, the insurer is treated as a continuation of the original insurer and must keep exercising the rights, powers, and duties that law gives to insurers of the same classes, while protecting pre-existing rights and contracts, subject to the mutualization plan.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1054. Such insurer, after mutualization, shall be a continuation of the original insurer, and such mutualization shall not affect existing suits, rights or contracts except as provided in said mutualization plan as approved. Such insurer, after mutualization, shall exercise all the rights and powers and perform all the duties conferred or imposed by law upon insurers writing the classes of insurance written by it, and to protect rights and contracts existing prior to mutualization, subject to the effect of said mutualization plan. (Added by Stats. 1935, Ch. 291.)
  63. 10540.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Premiums and Premium Accounts [10540 - 10541] ( Article 3 added by Stats. 1945, Ch. 993. )

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    An incorporated life insurer on the reserve basis may collect premiums in advance and may accept money for future premiums, but it may not take more than the allowed cap.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Premiums and Premium Accounts [10540 - 10541] ( Article 3 added by Stats. 1945, Ch. 993. ) ## 10540. An incorporated life insurer issuing life insurance policies on the reserve basis may collect premiums in advance. Such insurers may also accept moneys for the payment of future premiums related to any policies issued by it. No such insurer may accept such moneys in an amount to exceed (1) the sum of future unpaid premiums on any such policy or (2) the sum of 10 such future unpaid annual premiums on any such policy if such sum is less than the sum of future unpaid premiums on any such policy. This section shall not limit the right of such insurers to accept funds under an agreement which provides for an accumulation of such funds for the purpose of purchasing annuities at future dates. (Amended by Stats. 1957, Ch. 2314.)
  64. 10541.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Premiums and Premium Accounts [10540 - 10541] ( Article 3 added by Stats. 1945, Ch. 993. )

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    Qualified life insurers may issue funding agreements, but they cannot use them to write unauthorized insurance or guarantee/credit amounts except on a reasonable and equitable basis.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 6. Incorporated Life Insurers Issuing Policies on a Reserve Basis [10510 - 10541] ( Chapter 6 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 3. Premiums and Premium Accounts [10540 - 10541] ( Article 3 added by Stats. 1945, Ch. 993. ) ## 10541. (a) Insurers authorized to deliver or issue for delivery life insurance policies in this state may deliver or issue for delivery one or more funding agreements, but the issuance or delivery of those funding agreements shall not be deemed to be doing the insurance business described in Section 700, a class of business as provided in Section 100 or 101, a “security” as defined in Section 821, or receipt of “gross premiums” as defined in Section 12221 or 12222 of the Revenue and Taxation Code. Notwithstanding the definition of “insurance” in Section 22 or the definition of “life insurance” in Section 101, the issuance or delivery of a funding agreement by an admitted life insurer in this state shall constitute a lawful activity of that insurer that is reasonably related to and incidental to its insurance activities as provided in this section. However, this section shall not authorize any insurer to transact, under the guise of funding agreements, any class of insurance not authorized by its certificate of authority. (b) As used in this section, the term “funding agreement” means an agreement that authorizes an admitted life insurer to accept funds and that provides for an accumulation of those funds for the purpose of making one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies. However, the term “funding agreement” does not include any agreement in connection with the funding of one or more payments that are excludable from the gross income of the recipient under Section 104(a)(2) of the United States Internal Revenue Code, as it may be amended or renumbered from time to time. (c) No amounts shall be guaranteed or credited under any funding agreement except upon reasonable assumptions as to investment income and expenses and on a basis equitable to all holders of funding agreements of a given class. (d) Amounts paid to the insurer, and proceeds applied under optional modes of settlement, under those funding agreements may be allocated by the insurer to one or more separate accounts pursuant to Section 10506. (e) The commissioner may establish reasonable conditions or adopt reasonable regulations relating to (1) the reserves to be maintained by insurers issuing those funding agreements, (2) the accounting and reporting of funds credited under those funding agreements, (3) the disclosure of information to be given to holders and prospective holders of those funding agreements, (4) the qualification of persons selling those funding agreements on behalf of insurers, and (5) any other matters relating to funding agreements that the commissioner considers necessary, proper, and advisable. (f) Notwithstanding any other provision of law, the commissioner shall have sole authority to regulate the issuance and sale of those funding agreements, including the persons selling those funding agreements on behalf of insurers. (g) Nothing in this section is intended to affect the order in which allowed claims shall be given preference under Section 1033. Holders of funding agreements shall retain the priority in allowance of claims described in paragraph (2) of subdivision (a) of Section 1033. (Amended by Stats. 1998, Ch. 386, Sec. 2. Effective January 1, 1999.)
  65. 1055.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    The commissioner must handle a mutualized insurer as required for similar domestic insurers and must issue it a certificate of authority if it is solvent and has fully complied with state law.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1055. The commissioner shall exercise the powers and discharge the duties, concerning any insurer so mutualized, that are applicable to domestic insurers issuing policies of the same class. He shall issue a certificate of authority to transact the proper classes of insurance in this State to any insurer so mutualized which is solvent under Article 13, Chapter 1, Part 2, Division 1 of this code and which has fully complied with the laws of this State. (Added by Stats. 1935, Ch. 291.)
  66. 1056.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    The commissioner must pay all costs and expenses for mutualization proceedings from the insurer’s funds, with court 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1056. All costs and expenses connected with proceedings for the mutualization of such insurer shall be paid by the commissioner out of the funds of such insurer, whether or not mutualized, subject to the approval of said court. (Added by Stats. 1935, Ch. 291.)
  67. 1056.5.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    If a claimant cannot be located or payment otherwise cannot be made, the commissioner must deposit the money or property in the State Treasury. Before that deposit, the commissioner may pay the money or property to the entitled person if satisfactory evidence of the right is provided.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1056.5. Whenever money or other property is payable to any claimant out of the assets of any person under the provisions of Sections 1021 to 1033, but such person cannot be located or for any other reason the payment of such money or other property to such person cannot be made, although assets are available for such payment, such money or other property shall be deposited in the State Treasury by the commissioner. Such deposits shall be deemed to have been received under the provisions of Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure, and shall be subject to claim or other disposition as provided in said Chapter 7 (commencing with Section 1500) of Title 10. The commissioner may pay over the money or other property held by him to the persons respectively entitled thereto at any time prior to such deposit, upon being furnished satisfactory evidence of their right to the same. (Amended by Stats. 1963, Ch. 1762.)
  68. 1057.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    In proceedings under this article, the commissioner is treated as a trustee for the benefit of creditors and other interested persons.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1057. In all proceedings under this article, the commissioner shall be deemed to be a trustee for the benefit of all creditors and other persons interested in the estate of the person against whom the proceedings are pending. (Added by Stats. 1935, Ch. 291.)
  69. 1058.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    In a pending proceeding under this article, the court handling it can hear and decide related actions or proceedings involving the affected person.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1058. In any proceeding pending under the provisions of this article, the court in which such proceeding is pending shall have jurisdiction to hear and determine, in such proceeding, all actions or proceedings then pending or thereafter instituted by or against the person affected by a proceeding under this article. (Amended by Stats. 1939, Ch. 934.)
  70. 1059.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    When the commissioner performs duties under this article, he is treated as a public officer acting officially for the State, and the referenced Government Code provisions apply to him.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1059. The commissioner, in the performance of any of his duties under this article, shall be deemed to be a public officer acting in his official capacity on behalf of the State, and the provisions of Chapter 2, Division 7, Title 1 of the Government Code shall apply to him. (Amended by Stats. 1957, Ch. 386.)
  71. 106.

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

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    This section defines “disability insurance,” “health insurance,” and “specialized health insurance policy” for this code.

    ## 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. ) ## 106. (a) Disability insurance includes insurance appertaining to injury, disablement or death resulting to the insured from accidents, and appertaining to disablements resulting to the insured from sickness. (b) In statutes that become effective on or after January 1, 2002, the term “health insurance” for purposes of this code shall mean an individual or group disability insurance policy that provides coverage for hospital, medical, or surgical benefits. The term “health insurance” shall not include any of the following kinds of insurance: (1) Accidental death and accidental death and dismemberment. (2) Disability insurance, including hospital indemnity, accident only, and specified disease insurance that pays benefits on a fixed benefit, cash payment only basis. (3) Credit disability, as defined in subdivision (2) of Section 779.2. (4) Coverage issued as a supplement to liability insurance. (5) Disability income, as defined in subdivision (c) of Section 799.01. (6) Insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance. (7) Insurance arising out of a workers’ compensation or similar law. (8) Long-term care. (c) In a statute that becomes effective on or after January 1, 2008, the term “specialized health insurance policy” as used in this code shall mean a policy of health insurance for covered benefits in a single specialized area of health care, including dental-only, vision-only, and behavioral health-only policies. (Amended by Stats. 2022, Ch. 424, Sec. 1. (SB 1242) Effective January 1, 2023.)
  72. 1060.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    The commissioner must include specified insolvency and delinquency information in the annual report and send it to the Governor, the Legislature, and certain insurance committees.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1060. The commissioner shall transmit all of the following to the Governor, the Legislature, and to the committees of the Senate and Assembly having jurisdiction over insurance in the annual report submitted pursuant to Section 12922: (a) The names of the persons proceeded against under this article. (b) Whether such persons have resumed business or have been liquidated or have been mutualized. (c) Such other facts on the operations of the Conservation & Liquidation Office as will acquaint the Governor, the policyholders, creditors, shareholders and the public with his or her proceedings under this article, including, but not limited to: (1) An itemization of the number of staff, total salaries of staff, a description of the compensation methodology, and an organizational flowchart. (2) Annual operating goals and results. (3) A summary of all Conservation and Liquidation Office costs, including an itemization of internal and external costs, and a description of the methodology used to allocate those costs among insurer estates. (4) A list of all current insolvencies not closed within ten years of a court ordered liquidation, and a narrative explaining why each insolvency remains open. (5) An accounting of total claims by estate. (6) A list of current year and cumulative distributions by class of creditor for each estate. (7) For each proceeding, the net value of the estate at the time of conservation or liquidation and the net value at the end of the preceding calendar year. (d) Other facts on the operations of the individual estates as will acquaint the Governor, Legislature, policyholders, creditors, shareholders, and the public with his or her proceedings under this article, including, but not limited to: (1) The annual operating goals and results. (2) The status of the conservation and liquidation process. (3) Financial statements, including current and cumulative distributions, comparing current calendar year to prior year. (Amended by Stats. 2008, Ch. 751, Sec. 58. Effective September 30, 2008.)
  73. 10600.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    This section says the part is known as the “Health Insurance Disclosure Act of 1974.”

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10600. This part shall be known and may be referred to as the “Health Insurance Disclosure Act of 1974.” (Added by Stats. 1974, Ch. 936.)
  74. 10601.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    This section defines key terms used in Chapter 7 on disability insurance disclosure.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10601. As used in this chapter: (a) “Benefits and coverage” means the accident, sickness or disability indemnity available under a policy of disability insurance. (b) “Exception” means any provision in a policy whereby coverage for a specified hazard or condition is entirely eliminated. (c) “Reduction” means any provision in a policy which reduces the amount of a policy benefit to some amount or period less than would be otherwise payable for medically authorized expenses or services had such a reduction not been used. (d) “Limitation” means any provision other than an exception or a reduction which restricts coverage under the policy. (e) “Presenting for examination or sale” means either (1) publication and dissemination of any brochure, mailer, advertisement, or form which constitutes a presentation of the provisions of the policy and which provides a policy enrollment or application form, or (2) consultations or discussions between prospective beneficiaries or their contract agents and employees or agents of disability insurers, when such consultations or discussions include presentation of formal, organized information about the policy which is intended to influence or inform the prospective insured or beneficiary, such as brochures, summaries, charts, slides, or other modes of information in lieu of or in addition to the policy itself. (f) “Disability insurance” means every policy of disability insurance, self-insured employee welfare benefit plan, and nonprofit hospital service plan issued, delivered, or entered into pursuant to or described in Chapter 1 (commencing with Section 10110), Chapter 4 (commencing with Section 10270), or Chapter 11A (commencing with Section 11491) of this part. (g) “Insurer” means every insurer transacting disability insurance, every self-insured employee welfare plan, and every nonprofit hospital service plan specified in subdivision (e). (h) “Disclosure form” means the standard supplemental disclosure form required pursuant to Section 10603. (Added by Stats. 1974, Ch. 936.)
  75. 10602.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    If a policy’s definition of “hospital” or “nursing home” leaves out certain covered health-facility care, that missing coverage counts as a limitation.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10602. For the purposes of this chapter, where the definition of the term “hospital” in the policy omits care in any “health facility” defined pursuant to subdivision (a) or (b) of Section 1250 of the Health and Safety Code, the omitted coverage shall constitute a limitation. Further, where the definition of the term “nursing home” in the policy omits care in any “health facility” defined pursuant to subdivision (c) or (d) of Section 1250 of the Health and Safety Code, the omitted coverage shall constitute a limitation. (Added by Stats. 1974, Ch. 936.)
  76. 10602.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    An insurer that contracts with hospitals may distinguish between contracting and noncontracting hospitals.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10602.1. Nothing in this chapter shall prevent an insurer which makes contracts with hospitals from distinguishing between contracting hospitals and noncontracting hospitals. (Added by Stats. 1974, Ch. 936.)
  77. 10603.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    The commissioner must create a standard disclosure form for disability insurance, and insurers must provide policy summary information using the commissioner’s form and any required formatting. Some insurers may satisfy these requirements by using the federal summary of benefits and coverage, but they must still ensure other required disclosures are provided and submit the summary with the policy to the commissioner.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10603. (a) (1) On or before April 1, 1975, the commissioner shall promulgate a standard supplemental disclosure form for all disability insurance policies. Upon the appropriate disclosure form as prescribed by the commissioner, each insurer shall provide, in easily understood language and in a uniform, clearly organized manner, as prescribed and required by the commissioner, the summary information about each disability insurance policy offered by the insurer as the commissioner finds is necessary to provide for full and fair disclosure of the provisions of the policy. (2) On and after January 1, 2014, a disability insurer offering health insurance coverage subject to Section 2715 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-15) shall satisfy the requirements of this section and the implementing regulations by providing the uniform summary of benefits and coverage required under Section 2715 of the federal Public Health Service Act and any rules or regulations issued thereunder. An insurer that issues the federal uniform summary of benefits referenced in this paragraph shall ensure that all applicable disclosures required in this chapter and its implementing regulations are met in other documents provided to policyholders and insureds. An insurer subject to this paragraph shall provide the uniform summary of benefits and coverage to the commissioner together with the corresponding health insurance policy pursuant to Section 10290. (3) Commencing October 1, 2016, the uniform summary of benefits and coverage referenced in this subdivision shall constitute a vital document for the purposes of Section 10133.8. Not later than July 1, 2016, the commissioner shall develop written translations of the template uniform summary of benefits and coverage for all language groups identified by the State Department of Health Care Services in all plan letters as of August 27, 2014, for translation services pursuant to Section 14029.91 of the Welfare and Institutions Code, except for any language group for which the United States Department of Labor has already prepared a written translation. Not later than July 1, 2016, the commissioner shall make available on the department’s Internet Web site written translations of the template uniform summary of benefits and coverage developed by the commissioner, and written translations prepared by the United States Department of Labor, if available, for any language group to which this subparagraph applies. (b) This section does not preclude the disclosure form from being included with the evidence of coverage or certificate of coverage or policy. (Amended by Stats. 2016, Ch. 86, Sec. 212. (SB 1171) Effective January 1, 2017.)
  78. 10603.04.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    Health insurers offering dental coverage must use and provide a standardized benefits and coverage disclosure matrix, and group policyholders must share it and related coverage documents in specified situations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10603.04. (a) For policy years on and after January 1, 2021, or 12 months after regulations are adopted under subdivision (f), whichever occurs later, a health insurer that issues, sells, renews, or offers a policy that covers dental services in this state, in addition to any other applicable disclosure requirements, shall use a uniform benefits and coverage disclosure matrix, which shall be developed by the department, in conjunction with the Department of Managed Health Care, and in consultation with stakeholders. At a minimum, the benefits and coverage disclosure matrix shall require the health insurer to make available all of the following relating to covered dental services, together with the corresponding copayments or coinsurance and limitations: (1) The annual overall policy deductible. (2) The annual benefit limit. (3) Coverage for the following categories: (A) Preventive and diagnostic services. (B) Basic services. (C) Major services. (D) Orthodontia services. (4) Dental policy reimbursement levels and estimated insured cost share for service. (5) Waiting periods. (6) Examples to illustrate coverage and estimated insured costs of commonly used benefits. The examples shall include at least one service from each of the following categories listed in paragraph (3): (A) Preventive and diagnostic services. (B) Basic services. (C) Major services. (b) All health insurers, solicitors, and representatives of a health insurer that issue, sell, renew, or offer a policy that covers dental services shall, when presenting any policy for examination or sale to an individual prospective insured, make available to the individual a properly completed benefits and coverage disclosure matrix, as prescribed by the commissioner pursuant to this section for each dental policy examined or sold. (c) In the case of group policies for dental services, the completed disclosures and coverage matrix and evidence of coverage shall be made available to the policyholder upon delivery of the completed policy for dental insurance. (d) Group policyholders shall make available the completed benefits and coverage disclosure matrix to all persons eligible to be a policyholder under the group policy at the time those persons are offered the dental insurance. If the individual group members are offered a choice of dental policies, separate benefits and coverage disclosure matrices shall be made available for each dental policy offered. Each group policyholder shall also make available copies of the evidence of coverage to all applicants, upon request, prior to enrollment and to all policyholders insured under the group policy. (e) The health insurer offering a policy that covers dental services in the individual, small, or large group market shall make available the benefits and coverage disclosure matrix to all individuals newly enrolling for coverage, experiencing a special enrollment event, and renewing coverage, and shall make available the benefits and coverage disclosure matrix to all other insureds upon request. (f) (1) The department shall adopt emergency regulations pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code to implement this section. The department shall consult with the Department of Managed Health Care in adopting the emergency regulations, as appropriate. The adoption of regulations pursuant to this section shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health, or safety. (2) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, emergency regulations adopted pursuant to this section shall not be subject to the review and approval of the Office of Administrative Law. The regulations shall become effective immediately upon filing with the Secretary of State. The regulations shall not remain in effect more than 120 days unless the adopting agency complies with all of the provisions of Chapter 3.5 (commencing with Section 11340) as required by subdivision (c) of Section 11346.1 of the Government Code. (g) This section does not apply to Medi-Cal dental managed care contracts authorized under Chapter 7 (commencing with Section 14000) and Chapter 8 (commencing with Section 14200) of Part 3 of Division 9 of the Welfare and Institutions Code. (Added by Stats. 2018, Ch. 933, Sec. 5. (SB 1008) Effective January 1, 2019.)
  79. 10604.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    The disclosure form must list specified information about a disability insurance policy, including coverage categories, benefits, exclusions, premium cost, cost-sharing, renewal terms, and a statement that the form is only a summary.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10604. The disclosure form shall include the following information, in concise and specific terms, relative to the disability insurance policy: (a) The applicable category or categories of coverage provided by the policy, from among the following: (1) Basic hospital expense coverage. (2) Basic medical-surgical expense coverage. (3) Hospital confinement indemnity coverage. (4) Major medical expense coverage. (5) Disability income protection coverage. (6) Accident only coverage. (7) Specified disease or specified accident coverage. (8) Such other categories as the commissioner may prescribe. (b) The principal benefits and coverage of the disability insurance policy. (c) The exceptions, reductions, and limitations that apply to such policy. (d) A summary, including a citation of the relevant contractual provisions, of the process used to authorize or deny payments for services under the coverage provided by the policy including coverage for subacute care, transitional inpatient care, or care provided in skilled nursing facilities. This subdivision shall only apply to policies of disability insurance that cover hospital, medical, or surgical expenses. (e) The full premium cost of such policy. (f) Any copayment, coinsurance, or deductible requirements that may be incurred by the insured or his family in obtaining coverage under the policy. (g) The terms under which the policy may be renewed by the insured, including any reservation by the insurer of any right to change premiums. (h) A statement that the disclosure form is a summary only, and that the policy itself should be consulted to determine governing contractual provisions. (Amended by Stats. 1996, Ch. 1024, Sec. 6. Effective January 1, 1997.)
  80. 10604.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    Certain disability insurers must print and display a prescribed notice about unavailable reproductive health services in provider directories and related coverage documents.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10604.1. (a) The Legislature finds and declares that the right of every patient to receive basic information necessary to give full and informed consent is a fundamental tenet of good public health policy and has long been the established law of this state. Some hospitals and other providers do not provide a full range of reproductive health services and may prohibit or otherwise not provide sterilization, infertility treatments, abortion, or contraceptive services, including emergency contraception. It is the intent of the Legislature that every patient be given full and complete information about the health care services available to allow patients to make well informed health care decisions. (b) On or before July 1, 2001, every disability insurer that provides coverage for hospital, medical, or surgical benefits, and which provides a list of network providers to prospective insureds and insureds, shall do both of the following: (1) Include the following statement, in at least 12-point boldface type, at the beginning of each provider directory: “Some hospitals and other providers do not provide one or more of the following services that may be covered under your policy and that you or your family member might need: family planning; contraceptive services, including emergency contraception; sterilization, including tubal ligation at the time of labor and delivery; infertility treatments; or abortion. You should obtain more information before you become a policyholder or select a network provider. Call your prospective doctor or clinic, or call the insurer at (insert the insurer’s membership services number or other appropriate number that individuals can call for assistance) to ensure that you can obtain the health care services that you need.” (2) Place the statement described in paragraph (1) in a prominent location on any provider directory posted on the insurer’s website, if any, and include this statement in a conspicuous place in the insurer’s evidence of coverage and disclosure forms. (c) A disability insurer shall not be required to provide the statement described in paragraph (1) of subdivision (b) in a service area in which none of the hospitals, health facilities, clinics, medical groups, or independent practice associations with which it contracts limit or restrict any of the reproductive services described in the statement. (d) This section shall not apply to vision-only, dental-only, accident-only, specified disease, hospital indemnity, Medicare supplement, long-term care, or disability income insurance. (Added by Stats. 2000, Ch. 347, Sec. 3. Effective January 1, 2001.)
  81. 10604.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    An insurer must annually disclose specified compensation information to the governing board of a public agency that holds the group health insurance policy.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10604.5. An insurer shall annually disclose to the governing board of a public agency that is the policyholder of a group health insurance policy, the name and address of, and amount paid to, any agent, broker, or individual to whom the insurer paid fees or commissions related to the public agency’s group health insurance policy. As part of this disclosure, the insurer shall include the name, address, and amounts paid to the specific agents, brokers, or individuals involved in transactions with the public agency. The compensation disclosure required by this section is in addition to any other compensation disclosure requirements that exist under law. (Added by Stats. 2008, Ch. 331, Sec. 2. Effective January 1, 2009.)
  82. 10605.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    Insurers and their employees or agents must give a completed disclosure form when offering disability insurance to an individual, and group contract holders must pass copies of the form to eligible persons or family units.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10605. (a) Effective July 1, 1976, all insurers, and their employees and agents, shall, when presenting any disability insurance policy for examination or sale to an individual prospective insured or individual prospective subscriber, provide such individual with a properly completed disclosure form, as prescribed by the commissioner pursuant to Sections 10603 and 10604, for each disability insurance policy so examined or sold. (b) In the case of group disability insurance contracts, the completed disclosure form shall be presented to the contract holder upon delivery of the group policy or contract. (c) Group insurance contract holders shall disseminate copies of the completed disclosure form to all persons or family units eligible under the group contract. Where the individual members of the group are offered a choice of policies, separate disclosure forms shall be supplied for each policy available. (d) Disability insurance issued in connection with an employees’ welfare plan subject to the Federal Employee Retirement Income Security Act of 1974 (P.L. 93-406) is exempt from the provisions of this chapter. (Amended by Stats. 1975, Ch. 1208.)
  83. 10606.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    Insurers must include any supplemental disclosure information required by the commissioner in advertising and consumer information used to promote health insurance.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10606. Effective July 1, 1976, where the commissioner finds it necessary in the interest of full and fair disclosure, all advertising and other consumer information, including brochures, disseminated by insurers for the purpose of influencing persons to purchase health insurance shall contain such supplemental disclosure information as the commissioner may require. (Amended by Stats. 1975, Ch. 1208.)
  84. 10607.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    Insurers and their employees or agents must give a written loss-ratio disclosure when presenting a plan for examination or sale to an individual or a small group of 25 or fewer people.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10607. In addition to the other disclosures required by this chapter, every insurer and their employees or agents shall, when presenting a plan for examination or sale to any individual or the representative of a group consisting of 25 or fewer individuals, disclose in writing the ratio of incurred claims to earned premiums (loss-ratio) for the insurer’s preceding calendar year. This section shall become operative on March 1, 1991, in order to allow insurers time to comply with its provisions. (Added by Stats. 1990, Ch. 1071, Sec. 2. Section operative March 1, 1991, by its own provisions.)
  85. 10608.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    The commissioner may issue reasonable rules and regulations, and updates to them, to administer this chapter.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10608. The commissioner shall, from time to time as conditions warrant, after notice and public hearing, promulgate such reasonable rules and regulations, and amendments and additions thereto, as are necessary to administer this chapter. (Added by Stats. 1974, Ch. 936.)
  86. 10609.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. )

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    Each insurer must file copies of its printed advertising with the commissioner, to the extent the commissioner requires, starting no later than January 1, 1976.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 7. Disability Insurance Disclosure [10600 - 10609] ( Chapter 7 added by Stats. 1974, Ch. 936. ) ## 10609. Beginning on or before January 1, 1976, each insurer shall, to the extent required by the commissioner, file with the commissioner copies of all printed advertising which the insurer proposes to disseminate in the state. (Added by renumbering Section 790.025 by Stats. 1975, Ch. 1208.)
  87. 1061.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    The Department of Finance must inspect the commissioner’s books and accounts at least every two years, file a report with the court, and give the commissioner a certified copy.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1061. In verification of the matters set forth in Section 1060 of this code, the Department of Finance shall, at least every two years or more often if requested by the commissioner, examine the commissioner’s books and accounts relating to all proceedings under this article, and shall file a report of each examination with the court in which the respective proceeding is pending and shall furnish the commissioner a certified copy of each report. The expense of examining the books and accounts of the commissioner as conservator or liquidator under this article shall be paid out of the support appropriation for the Department of Insurance current at the date of billing for the expense and shall, upon order of the court or courts before which the proceedings under the articles are pending, be ratably reimbursed to that appropriation out of the assets of the estates administered by the commissioner as conservator or liquidator under this article. (Amended by Stats. 2012, Ch. 786, Sec. 15. (AB 2303) Effective January 1, 2013.)
  88. 1062.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. )

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    If an insurer order under Sections 1011 or 1016 affects liable members, the commissioner and court must calculate and collect any assessment using the steps in this section.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14. Proceedings in Cases of Insolvency and Delinquency [1010 - 1062] ( Article 14 amended by Stats. 1935, Ch. 291. ) ## 1062. In the event of the entry of an order under Section 1011 or 1016 of this article affecting any person having members, subscribers or policyholders, hereinafter referred to as “members” who are liable for assessment by law or by the provisions of their policies or contracts, and in which the termination of the policy or contract does not relieve the member from such liability, where the commissioner in his discretion decides that an assessment would be in order, the liability of such members shall be determined, and the assessment therefor levied in the following manner: 1. Within one year from the date of the entry of the order under the provisions of Section 1011 or 1016 of this article, the commissioner shall make a report to the court setting forth: (a) the reasonable value of the assets of such person; (b) its probable liabilities, including reasonable costs of liquidation; and (c) the probable necessary assessment, if any, to pay all claims in full. 2. Upon the basis of such report, including any amendments thereof, the court shall determine the basis for calculating the liability of each member, subscriber or policyholder and shall order the commissioner to determine the amount of liability of each of the members. 3. Thereafter the commissioner shall give notice to each member, subscriber or policyholder of the amount of his liability by inclosing notice thereof in a sealed envelope, addressed and mailed, postage prepaid, to each member, subscriber or policyholder at his last known address as the same appears upon the books of the insurer. 4. Not less than 20 days after the mailing of said notice, as provided in paragraph 3 of this section, the commissioner shall report to the court the names of the members, subscribers or policyholders who have failed to pay their assessment in accordance with said notice, whereupon the court shall issue an order directing each of said members, subscribers or policyholders to appear in said court and show cause in the proceedings pending against such person, why he should not be held liable to pay such assessment, and why the commissioner should not have judgment therefor. 5. The commissioner shall cause a notice of such order setting forth a brief summary of the contents thereof: (a) to be published in such manner as shall be directed by the court; and (b) to be inclosed in a sealed envelope, addressed and mailed by registered mail with return receipt requested, postage prepaid, to each of said members whose liability for assessment remains unpaid, at his last known address, at least 20 days before the return day of such order to show cause. 6. On the return day of such order to show cause, (a) if such member shall not appear and serve verified objections on the commissioner, the court shall make an order adjudicating that such member is liable for the amount of such assessment, and that the commissioner may have a judgment against such member therefor; (b) if such member shall appear and serve verified objections upon the commissioner, there shall be a full hearing before the court, and if the court affirms his liability to pay the whole or some part of said assessment, the commissioner may have judgment therefor. 7. A judgment upon any such order, shall have the same force and effect, and may be entered and may be appealed from as if it were a judgment in an original action brought in the court in which the proceeding is pending. (Amended by Stats. 1970, Ch. 1205.)
  89. 1063.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    Insurers in the covered classes must establish and join the California Insurance Guarantee Association, while excluded insurance classes are outside 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063. (a) Within 60 days after the original effective date of this article, all insurers, including reciprocal insurers, admitted to transact insurance in this state of any or all of the following classes only in accordance with the provisions of Chapter 1 (commencing with Section 100) of Part 1 of this division: fire (see Section 102), marine (see Section 103), plate glass (see Section 107), liability (see Section 108), workers’ compensation (see Section 109), common carrier liability (see Section 110), boiler and machinery (see Section 111), burglary (see Section 112), sprinkler (see Section 114), team and vehicle (see Section 115), automobile (see Section 116), aircraft (see Section 118), and miscellaneous (see Section 120), shall establish the California Insurance Guarantee Association (the association); provided, however, this article shall not apply to the following classes or kinds of insurance: life and annuity (see Section 101), title (see Section 104), fidelity or surety including fidelity or surety bonds, or any other bonding obligations (see Section 105), disability or health (see Section 106), credit (see Section 113), mortgage guaranty, insolvency or legal (see Section 119), financial guaranty or other forms of insurance offering protection against investment risks (see Section 124), the ocean marine portion of any marine insurance or ocean marine coverage under any insurance policy including the following: the Jones Act (46 U.S.C. Sec. 688), the Longshore and Harbor Workers’ Compensation Act (33 U.S.C. Sec. 901 et seq.), or any other similar federal statutory enactment, or any endorsement or policy affording protection and indemnity coverage, or reinsurance as defined in Section 620, or fraternal fire insurance written by associations organized and operating under Sections 9080 to 9103, inclusive. Any insurer admitted to transact only those classes or kinds of insurance excluded from this article shall not be a member insurer of the association. Each insurer admitted to transact a class of insurance included in this article, including the State Compensation Insurance Fund, as a condition of its authority to transact insurance in this state, shall participate in the association whether established voluntarily or by order of the commissioner after the elapse of 60 days following the original effective date of this article in accordance with rules to be established as provided in this article. It shall be the purpose of the association to provide for each member insurer insolvency insurance as defined in Section 119.5. (b) The association shall be managed by a board of governors, composed of nine member insurers, each of which shall be appointed by the commissioner to serve initially for terms of one, two, or three years and thereafter for three-year terms so that three terms shall expire each year on December 31, and shall continue in office until his or her successor shall be appointed and qualified. At least five members of the board shall be domestic insurers. At least three of the members shall be stock insurers, and at least three shall be nonstock insurers. The nine members shall be representative, as nearly as possible, of the classes of insurance and of the kinds of insurers covered by this article. In case of a vacancy for any reason on the board, the commissioner shall appoint a member insurer to fill the unexpired term. In addition to the nine member insurers, the membership of the board shall also include one public member appointed by the President pro Tempore of the Senate, one public member appointed by the Speaker of the Assembly, one business member appointed by the commissioner, and one labor member appointed by the commissioner. (c) The association shall adopt a plan of operations, and any amendments thereto, not inconsistent with the provisions of this article, necessary to assure the fair, reasonable, and equitable manner of administering the association, and to provide for other matters as are necessary or advisable to implement the provisions of this article. The plan of operations and any amendments thereto shall be subject to prior written approval by the commissioner. All members of the association shall adhere to the plan of operation. (d) If for any reason the association fails to adopt a suitable plan of operation within 90 days following the original effective date of this article, or if at any time thereafter the association fails to adopt suitable amendments to the plan of operation, the commissioner shall after hearing adopt and promulgate reasonable rules as are necessary or advisable to effectuate the provisions of this chapter. These rules shall continue in force until modified by the commissioner after hearing or superseded by a plan of operation, adopted by the association and approved by the commissioner. (e) In accordance with its plan of operation, the association may designate one or more of its members as a servicing facility, but a member may decline this designation. Each servicing facility shall be reimbursed by the association for all reasonable expenses it incurs and for all payments it makes on behalf of the association. Each servicing facility shall have authority to perform any functions of the association that the board of governors lawfully may delegate to it and to do so on behalf of and in the name of the association. The designation of servicing facilities shall be subject to the approval of the commissioner. (f) The association shall have authority to borrow funds when necessary to effectuate the provisions of this article, and may provide in its plan of operations for any of the following: (1) The issuance of notes, bonds, or debentures, or the establishment of a special purpose trust or other entity, solely for the purpose of facilitating a financing. (2) The securing of that borrowing or those notes, bonds, or debentures by pledging or granting liens or mortgages, or by otherwise encumbering its real or personal property, including, but not limited to, premiums levied under Section 1063.5. (g) The association, either in its own name or through servicing facilities, may be sued and may use the courts to assert or defend any rights the association may have by virtue of this article as reasonably necessary to fully effectuate the provisions thereof. (h) The association shall have the right to intervene as a party in any proceeding instituted pursuant to Section 1016 wherein liquidation of a member insurer as defined in Section 1063.1 is sought. (i) (1) The association shall have an annual audit of its financial condition conducted by an independent certified public accountant. The audit shall be conducted, to the extent possible, in accordance with generally accepted auditing standards (GAAS) and the report of the audit shall be submitted to the commissioner. (2) The association shall annually audit at least one-third of the service companies retained by the association to adjust claims of insolvent insurers. The audits shall (A) assure that all covered claims are being investigated, adjusted, and paid in accordance with customary industry standards and practices and all applicable statutes, rules, and regulations, and (B) examine the management and supervisory systems overseeing the claims functions. The audits shall be conducted by the association or an independent auditor, provided that the three largest service companies, as measured by the number of claims processed for the association during the previous three fiscal years, shall be audited by an independent auditor at least once every three years. The association shall implement systems to retain independent auditing firms for the purpose of this paragraph, provided that no one firm is designated or utilized as an exclusive provider. Audits conducted pursuant to this paragraph shall be submitted annually to the commissioner for review. (j) The commissioner shall examine the association to the same extent as, and in accordance with, the requirements of Article 4 (commencing with Section 729) of Chapter 1 of Part 2 of Division 1, which sets forth the examination requirements applicable to admitted insurers. A copy of the examination report shall be filed with the Chairpersons of the Senate and Assembly Committees on Insurance no later than December 31 of the year the report is completed. (Amended by Stats. 2012, Ch. 786, Sec. 16. (AB 2303) Effective January 1, 2013.)
  90. 1063.1.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    This section defines key insurance terms like member insurer, insolvent insurer, and covered claims, and it sets several limits and exclusions for covered claims.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.1. As used in this article: (a) “Member insurer” means an insurer required to be a member of the association in accordance with subdivision (a) of Section 1063, except and to the extent that the insurer is participating in an insolvency program adopted by the United States government. (b) “Insolvent insurer” means an insurer that was a member insurer of the association, consistent with paragraph (11) of subdivision (c), either at the time the policy was issued or when the insured event occurred, and against which an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction, or, in the case of the State Compensation Insurance Fund, if a finding of insolvency is made by a duly enacted legislative measure. (c) (1) “Covered claims” means the obligations of an insolvent insurer, including the obligation for unearned premiums, that satisfy all of the following requirements: (A) Imposed by law and within the coverage of an insurance policy of the insolvent insurer. (B) Which were unpaid by the insolvent insurer. (C) Which are presented as a claim to the liquidator in the state of domicile of the insolvent insurer or to the association on or before the last date fixed for the filing of claims in the domiciliary liquidating proceedings. (D) Which were incurred before the date coverage under the policy terminated and before, on, or within 30 days after the date the liquidator was appointed. (E) For which the assets of the insolvent insurer are insufficient to discharge in full. (F) In the case of a policy of workers’ compensation insurance, to provide workers’ compensation benefits under the workers’ compensation law of this state or under the workers’ compensation law of any state if the injured worker is a resident of this state and not otherwise entitled to coverage from an organization similar to the association in any other state. (G) In the case of other classes of insurance if the claimant or insured is a resident of this state at the time of the insured occurrence, or the property from which the claim arises is permanently located in this state. (2) “Covered claims” also includes the obligations assumed by an assuming insurer from a ceding insurer when the assuming insurer subsequently becomes an insolvent insurer if, at the time of the insolvency of the assuming insurer, the ceding insurer is no longer admitted to transact business in this state. Both the assuming insurer and the ceding insurer shall have been member insurers at the time the assumption was made. “Covered claims” under this paragraph shall satisfy the requirements of subparagraphs (A) to (G), inclusive, of paragraph (1), except for the requirement that the claims be against policies of the insolvent insurer. The association has a right to recover a deposit, bond, or other assets that may have been required to be posted by the ceding company to the extent of covered claim payments and shall be subrogated to any rights the policyholders may have against the ceding insurer. (3) “Covered claims” does not include obligations arising from the following: (A) Life, annuity, health, or disability insurance. (B) Mortgage guaranty, financial guaranty, or other forms of insurance offering protection against investment risks. (C) Fidelity or surety insurance including fidelity or surety bonds, or any other bonding obligations. (D) Credit insurance. (E) Title insurance. (F) Ocean marine insurance or ocean marine coverage under an insurance policy, including claims arising from the following: the Jones Act (46 U.S.C. Secs. 30104 and 30105), the Longshore and Harbor Workers’ Compensation Act (33 U.S.C. Sec. 901 et seq.), or any other similar federal statutory enactment, or an endorsement or policy affording protection and indemnity coverage. (G) A claims servicing agreement or insurance policy providing retroactive insurance of a known loss or losses, except a special excess workers’ compensation policy issued pursuant to subdivision (c) of Section 3702.8 of the Labor Code that covers all or any part of workers’ compensation liabilities of an employer that is issued, or was previously issued, a certificate of consent to self-insure pursuant to subdivision (b) of Section 3700 of the Labor Code. (4) “Covered claims” does not include an obligation of the insolvent insurer arising out of a reinsurance contract, an obligation incurred after the expiration date of the insurance policy or after the insurance policy has been replaced by the insured, canceled at the insured’s request, or canceled by the liquidator, or an obligation to a state or to the federal government. If the individual has a covered claim that includes medical services provided by a medical facility owned in whole or in part by a state or federal agency, the association may pay that claim directly to the facility, as long as the services provided otherwise qualify as a covered claim and the claim is owned by the medical facility asserting the claim. (5) (A) “Covered claims” does not include an obligation to insurers, insurance pools, or underwriting associations, nor their claims for contribution, indemnity, or subrogation, equitable or otherwise, except as otherwise provided in this chapter. (B) An insurer, insurance pool, or underwriting association may not maintain, in its own name or in the name of its insured, a claim or legal action against the insured of the insolvent insurer for contribution, indemnity, or by way of subrogation, except insofar as, and to the extent only, that the claim exceeds the policy limits of the insolvent insurer’s policy. In those claims or legal actions, the insured of the insolvent insurer is entitled to a credit or setoff in the amount of the policy limits of the insolvent insurer’s policy, or in the amount of the limits remaining, when those limits have been diminished by the payment of other claims. (6) “Covered claims,” except in cases involving a claim for workers’ compensation benefits or for unearned premiums, does not include a claim in an amount of one hundred dollars ($100) or less or the portion of a claim that is in excess of the applicable limits provided in the insurance policy issued by the insolvent insurer. (7) (A) “Covered claims” does not include that portion of a claim, other than a claim for workers’ compensation benefits, that is in excess of five hundred thousand dollars ($500,000). (B) For purposes of subparagraph (A), with respect to a policy of residential property insurance, each claim for a loss under a different coverage category shall be considered a separate covered claim. (C) Notwithstanding subparagraph (A), a claim for damage to, or loss of, a dwelling structure under a policy of residential property insurance shall not exceed one million dollars ($1,000,000) or the amount recoverable under the policy, whichever is less. (8) “Covered claims” does not include an amount awarded as punitive or exemplary damages, or an amount awarded by the Workers’ Compensation Appeals Board pursuant to Section 5814 or 5814.5 of the Labor Code because payment of compensation was unreasonably delayed or refused by the insolvent insurer. (9) “Covered claims” does not include either of the following: (A) A claim to the extent it is covered by any other insurance of a class covered by this article available to the claimant or insured. (B) A claim by a person other than the original claimant under the insurance policy in the claimant’s own name, the claimant’s assignee as the person entitled thereto under a premium finance agreement as defined in Section 673 and entered into before insolvency, or the claimant’s executor, administrator, guardian, or other personal representative or trustee in bankruptcy, and does not include a claim asserted by an assignee or one claiming by right of subrogation, except as otherwise provided in this chapter. (10) “Covered claims” does not include an obligation arising out of the issuance of an insurance policy written by the separate division of the State Compensation Insurance Fund pursuant to Sections 11802 and 11803. (11) “Covered claims” does not include an obligation of the insolvent insurer arising from a policy or contract of insurance issued or renewed before the insolvent insurer’s admission to transact insurance in the State of California. (12) “Covered claims” does not include surplus deposits of subscribers as defined in Section 1374.1. (13) “Covered claims” shall also include an obligation arising under an insurance policy written to indemnify a permissibly self-insured employer pursuant to subdivision (b) or (c) of Section 3700 of the Labor Code for its liability to pay workers’ compensation benefits in excess of a specific or aggregate retention. However, for purposes of this article, those claims shall not be considered workers’ compensation claims and therefore are subject to the per-claim limit in paragraph (7), and any payments and expenses related thereto shall be allocated to category (c) for claims other than workers’ compensation, homeowners’, and automobile, as provided in Section 1063.5. These provisions shall apply to obligations arising under a policy as described herein issued to a permissibly self-insured employer or group of self-insured employers pursuant to Section 3700 of the Labor Code and notwithstanding any other provision of this code, those obligations shall be governed by this provision in the event that the Self-Insurers’ Security Fund is ordered to assume the liabilities of a permissibly self-insured employer or group of self-insured employers pursuant to Section 3701.5 of the Labor Code. This paragraph applies only to insurance policies written to indemnify a permissibly self-insured employer or group of self-insured employers under subdivision (b) or (c) of Section 3700 of the Labor Code, for its liability to pay workers’ compensation benefits in excess of a specific or aggregate retention, and this paragraph does not apply to special excess workers’ compensation insurance policies unless issued pursuant to authority granted in subdivision (c) of Section 3702.8 of the Labor Code, and as provided for in subparagraph (G) of paragraph (3). In addition, this paragraph does not apply to a claims servicing agreement or insurance policy providing retroactive insurance of a known loss or losses as are excluded in subparagraph (G) of paragraph (3). A permissibly self-insured employer or group of self-insured employers, or the Self-Insurers’ Security Fund, shall, to the extent required by the Labor Code, be responsible for paying, adjusting, and defending each claim arising under policies of insurance covered under this section, unless the benefits paid on a claim exceed the specific or aggregate retention, in which case: (A) If the benefits paid on the claim exceed the specific or aggregate retention, and the policy requires the insurer to defend and adjust the claim, the association shall be solely responsible for adjusting and defending the claim, and shall make all payments due under the claim, subject to the limitations and exclusions of this article with regard to covered claims. As to each claim subject to this paragraph, notwithstanding any other provisions of this code or the Labor Code, and regardless of whether the amount paid by CIGA is adequate to discharge a claim obligation, neither the self-insured employer, group of self-insured employers, nor the Self-Insurers’ Security Fund shall have an obligation to pay benefits over and above the specific or aggregate retention, except as provided in this subdivision. (B) If the benefits paid on the claim exceed the specific or aggregate retention, and the policy does not require the insurer to defend and adjust the claim, the permissibly self-insured employer or group of self-insured employers, or the Self-Insurers’ Security Fund, shall not have any further payment obligations with respect to the claim, but shall continue defending and adjusting the claim, and shall have the right, but not the obligation, in a proceeding to assert all applicable statutory limitations and exclusions as contained in this article with regard to the covered claim. CIGA shall have the right, but not the obligation, to intervene in a proceeding in which the self-insured employer, group of self-insured employers, or the Self-Insurers’ Security Fund is defending a claim and shall be permitted to raise the appropriate statutory limitations and exclusions as contained in this article with respect to covered claims. Regardless of whether the self-insured employer or group of self-insured employers, or the Self-Insurers’ Security Fund, asserts the applicable statutory limitations and exclusions, or whether CIGA intervenes in a proceeding, CIGA shall be solely responsible for paying all benefits due on the claim, subject to the exclusions and limitations of this article with respect to covered claims. As to each claim subject to this paragraph, notwithstanding any other provision of this code or the Labor Code and regardless of whether the amount paid by CIGA is adequate to discharge a claim obligation, neither the self-insured employer, group of self-insured employers, nor the Self-Insurers’ Security Fund, shall have an obligation to pay benefits over and above the specific or aggregate retention, except as provided in this subdivision. (C) In the event that the benefits paid on the covered claim exceed the per-claim limit in paragraph (7), the responsibility for paying, adjusting, and defending the claim shall be returned to the permissibly self-insured employer or group of employers, or the Self-Insurers’ Security Fund. These provisions shall apply to all pending and future insolvencies. For purposes of this paragraph, a pending insolvency is one involving a company that is currently receiving benefits from the guarantee association. (14) “Covered claims” also includes all obligations arising under a policy issued to cover cybersecurity, as long as the association’s total liability for all those obligations does not exceed one million dollars ($1,000,000) or the policy limits, whichever is less. Cybersecurity claims shall be covered by the account categorized pursuant to subparagraph (C) of paragraph (2) of subdivision (a) of Section 1063.5, unless the coverage is specifically attached to a policy that would otherwise be covered by an account categorized pursuant to subparagraph (A) or (B) of paragraph (2) of subdivision (a) of Section 1063.5. (15) Notwithstanding any other provision in this section or Section 1063, if an insurance policy has been allocated to or assumed by a company that did not issue the policy pursuant to a state statute that provides for the division of an insurance company or the statutory assumption of designated policies by a new company, that statute provides a novation has been deemed to have occurred with respect to those policies, and that company is placed in liquidation, then to the extent a claim arising under that allocated or transferred policy would have been a covered claim had the original company been placed in liquidation before the statutory allocation or assumption, any claim arising under that same policy shall be a covered claim regardless of whether the company that allocated or assumed the policy was or was not a member at the time the policy was issued or when the insured event occurred. (d) “Admitted to transact insurance in this state” means an insurer possessing a valid certificate of authority issued by the department. (e) “Affiliate” means a person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with an insolvent insurer on December 31 of the year next preceding the date the insurer becomes an insolvent insurer. (f) “Control” 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 is presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10 percent or more of the voting securities of any other person. This presumption may be rebutted by showing that control does not in fact exist. (g) “Claimant” means an insured making a first party claim or a person instituting a liability claim. However, no person who is an affiliate of the insolvent insurer may be a claimant. (h) “Net direct written premiums” means the amount of direct written premiums in the annual financial statement on file with the commissioner, adjusted for any premiums written for any lines of insurance or types of coverages not covered by this article, plus premiums written in this state for coverage under a special excess workers’ compensation policy. (i) “Ocean marine insurance” includes marine insurance as defined in Section 103, except for inland marine insurance, as well as any other form of insurance, regardless of the name, label, or marketing designation of the insurance policy, that insures against maritime perils or risks and other related perils or risks, that are usually insured against by traditional marine insurance such as hull and machinery, marine builders’ risks, and marine protection and indemnity. Those perils and risks insured against include, without limitation, loss, damage, or expense or legal liability of the insured arising out of or incident to ownership, operation, chartering, maintenance, use, repair, or construction of a vessel, craft, or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness, or death for loss or damage to the property of the insured or another person. (j) “Unearned premium” means that portion of a premium as calculated by the liquidator that had not been earned because of the cancellation of the insolvent insurer’s policy and is that premium remaining for the unexpired term of the insolvent insurer’s policy. “Unearned premium” does not include an amount sought as return of a premium under a policy providing retroactive insurance of a known loss or return of a premium under a retrospectively rated policy or a policy subject to a contingent surcharge or a policy in which the final determination of the premium cost is computed after expiration of the policy and is calculated on the basis of actual loss experienced during the policy period. (Amended by Stats. 2022, Ch. 408, Sec. 2. (AB 2154) Effective January 1, 2023.)
  91. 1063.10.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    Orders or decisions of the commissioner made under Chapter 1347, and later amendments to those provisions, are subject to judicial review under Section 12940.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.10. All orders or decisions of the commissioner made pursuant to Chapter 1347, Statutes of 1969 (of which this article is a part) and the provisions thereof as amended from time to time, shall be subject to judicial review as provided in Section 12940. (Amended by Stats. 1970, Ch. 1205.)
  92. 1063.11.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    The commissioner may issue rules, regulations, and orders needed to carry out this article, after notice and an opportunity for interested parties 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.11. The commissioner may, upon notice and opportunity for all interested parties to be heard, issue such rules, regulations and orders as may be necessary to carry out the provisions of this article. Such rules and regulations shall be adopted, amended or repealed in accordance with Chapter 4.5 (commencing with Section 11371) of Part 1 of Division 3 of Title 2 of the Government Code. (Added by Stats. 1969, Ch. 1347.)
  93. 1063.12.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    The association and related persons are shielded from liability above specified covered-claim and cost amounts, and the association must indemnify certain board, committee, officer, or employee participants unless misconduct is finally found.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.12. (a) The association, its member insurers, and its officers, directors, agents or employees of the association, or its member insurers, shall under no circumstances be liable for any sum in excess of the amount of covered claims of the insolvent insurer, as defined under subdivision (c) of Section 1063.1 of this article and the costs of administration and the costs of loss adjustment, investigation and defenses relating to claims thereunder. (b) Any person or member made a party to any action, suit or proceeding because such person or member served on the board of governors or on a committee or was an officer or employee of the association shall be held harmless and be indemnified by the association against all liability and costs (including the amounts of judgments, settlements, fines or penalties) and expenses incurred in connection with such action, suit or proceeding; provided, however, such indemnification shall not be provided on any matter in which the person or member shall be finally adjudged in any such action, suit or proceeding to have committed a breach of duty involving gross negligence, dishonesty, willful misfeasance or reckless disregard of the responsibilities of his office. (c) The costs and expenses of such indemnification shall be prorated and paid for by the members in the same manner as provided in the plan of operations for the proration of premiums. (d) The provisions of this section shall not be construed as creating any right in any third person, and shall be applicable only as between the association and its member insurers and its officers, directors, agents, or employees of the association or its member insurers. (Amended by Stats. 1979, Ch. 384.)
  94. 1063.13.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    A member insurer of the association must not engage in the unlawful trade practice described in Section 790.03(g).

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.13. No member insurer of the association shall engage in the unlawful trade practice defined and condemned in subdivision (g) of Section 790.03. (Added by Stats. 1970, Ch. 1205.)
  95. 1063.14.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    Member insurers must recoup certain premium charges through surcharges, report collections, and remit collected amounts to the association on the stated timetable.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.14. (a) (1) The plan of operation adopted pursuant to subdivision (c) of Section 1063 shall contain provisions whereby each member insurer is required to recoup, in the year following the premium charge, a sum calculated to recoup the premium charge paid by the member insurer under this article by way of a surcharge on premiums charged for insurance policies to which this article applies. (2) Amounts recouped shall not be considered premiums for any other purpose, including the computation of gross premium tax or agents’ commission. (b) The plan of operation adopted pursuant to subdivision (c) of Section 1063 shall contain a provision requiring a member insurer to recoup the premium charge amount, as determined by the association, through a surcharge on premiums charged for insurance policies to which this article applies, even if a premium charge was not yet paid to the association because the member insurer had no direct written premium for insurance policies to which this article applies for the prior year. All surcharges collected in this manner shall be remitted to the association within 60 days of the end of the calendar year in which the surcharge is collected. (c) (1) The amount of any surcharge shall be separately stated on either a billing or policy declaration sent to an insured. The association shall determine the rate of the surcharge and the collection period for each category, and these shall be mandatory for all member insurers of the association who write business in those categories. (2) Each member insurer shall file a report in accordance with the provisions of the plan of operation indicating the amount of surcharges it has collected. (A) Member insurers who collect surcharges in excess of premium charges paid in the preceding year pursuant to Section 1063.5 shall remit the excess to the association as an additional premium within 30 days after the association has determined the amount of the excess recoupment and given notice to the member insurer of that amount. The excess shall be applied to reduce future premium charges in the appropriate category. (B) Member insurers who report surcharge collections that are less than what they paid in the preceding year’s premium charge shall receive reimbursement from the association for the shortfall in surcharge collection. (C) Member insurers may amend their reports indicating the amount of surcharges collected for the prior five years if they discover there was an error in the original reports filed with the association. (d) The plan of operation may permit a member insurer to omit collection of the surcharge from any of its insureds only if the expense of collecting the surcharge would exceed the amount of the surcharge, provided, however, that a member insurer is not entitled to reimbursement from the association pursuant to subparagraph (B) of paragraph (2) of subdivision (b) of any amount omitted from collection pursuant to this subdivision. (e) This section applies only to premium charges paid on or after January 1, 2017. (Amended by Stats. 2022, Ch. 408, Sec. 4. (AB 2154) Effective January 1, 2023.)
  96. 1063.145.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    The surcharge statement must describe the California Insurance Guarantee Association, and the text says California property and casualty insurers must participate in it and recover assessments through policy surcharges.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.145. The statement of the amount of surcharge required to be provided under subdivision (b) of Section 1063.14 shall include a description of, and purpose for, the California Insurance Guarantee Association, as follows: “Companies writing property and casualty insurance business in California are required to participate in the California Insurance Guarantee Association. If a company becomes insolvent the California Insurance Guarantee Association settles unpaid claims and assesses each insurance company for its fair share. California law requires all companies to surcharge policies to recover these assessments. If your policy is surcharged, ’CA Surcharge’ with an amount will be displayed on your premium notice.” (Amended by Stats. 2006, Ch. 538, Sec. 453. Effective January 1, 2007.)
  97. 1063.15.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    In workers’ compensation matters, the association gets the same time to act or exercise a right as the insurer, and the time limits are tolled until 45 days after a domiciliary or receiver is appointed.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.15. In any workers’ compensation matter the association shall have the same period of time within which to act or to exercise a right as is accorded to the insurer by the Labor Code, and those time periods shall be tolled against the association until 45 days after the appointment of a domiciliary or receiver. (Added by Stats. 1991, Ch. 537, Sec. 2.)
  98. 1063.17.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    This section requires the association’s board meetings to be open and public, gives the public access and notice rights, and allows limited closed sessions for listed subjects.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.17. (a) All meetings of the board of governors of the association and its investment and audit committees shall be open and public, and all persons shall be permitted to attend any meeting of the association except as otherwise provided in subdivision (g). This shall apply to meetings conducted in person and via teleconference. Attendance at telephonically conducted meetings by members of the public shall be made available by the publication by the association in its meeting notices as set forth below of a call-in number and passcode that members of the public may use to participate in the meeting. (b) As used in this section, “meeting” includes any congregation of a majority of the members of the board of governors or the investment and audit committee, as applicable, at the same time to hear, discuss, or deliberate upon any item that is within the responsibility of the association as set forth in this article or in the association’s plan of operations. Notwithstanding the foregoing, a meeting shall not include any of the following: (1) Individual contacts or conversations between a member of the board of governors and any other person, including, but not limited to, any employee or official of the association, that do not violate subdivision (c). (2) The attendance of a majority of the members of the board of governors or a committee at an industry conference or other gathering organized by a person or organization other than the association, provided that a majority of the members do not discuss among themselves any item that is within the responsibility of the association as set forth in this article or in the association’s plan of operations. (3) The attendance of a majority of the members, the board of governors, or a committee at a purely social or ceremonial occasion, provided that a majority of the members do not discuss among themselves any item that is within the responsibility of the association as set forth in this article or in the association’s plan of operations. (c) (1) A majority of the members of the board of governors shall not, outside a meeting authorized by this article, use a series of communications of any kind, directly or through intermediaries, to discuss, deliberate, or take action on any item of business that is within the responsibility of the association as set forth in this article or in the association’s plan of operations. (2) Paragraph (1) shall not be construed as preventing any employee or officer of the association from engaging in separate conversations or communications outside of a meeting authorized by this article with members of the board of governors in order to answer questions or provide information regarding matters within the responsibility of the association, if that person does not communicate to members of the board of governors the comments or position of any other member or members of the board. (d) All meetings of the association authorized under this article shall comply with the protections and prohibitions contained in Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal rules and regulations adopted in implementation of that act. (e) The association shall provide notice of its meetings that are open and public pursuant to subdivision (a). This notice and an agenda of items to be discussed shall be provided at least 10 days in advance of the meeting via the association’s Internet Web site, and the notice shall be published in a newspaper of general circulation in the State of California. In addition, members of the public may request notice by regular mail or by e-mail by making a written request to the association for notice of meetings that are open and public pursuant to subdivision (a). Notice may be waived, or the 10-day period modified with respect to any particular meeting by the board of governors of the association upon request submitted to the commissioner stating the need for a modified notice and exigent circumstances requiring waiver of the notice requirement at least 24 hours in advance of the meeting time set. The approval of the commissioner shall be deemed granted if a written denial of the request for waiver or modification of the notice period is not received at least four hours prior to the commencement of the meeting to be conducted under the modified notice. Notice of a meeting that does not meet the 10-day notice requirement under this subdivision shall be posted on the association’s Internet Web site and provided by e-mail to members of the public who have made a written request for e-mail notice to the association of meetings that are open and public pursuant to subdivision (a). A summary agenda shall be included in each such notice, but members of the board of governors may bring additional items of business to any such meeting. (f) At any meeting where notice is required pursuant to this section, the association shall reserve time for public comment on the issues addressed at the meeting. (g) Nothing in this section shall be construed to prohibit the board of governors of the association or its investment and audit committees from holding a closed meeting or a closed session of an open and public meeting to discuss any of the following subjects: (1) Bond issuances or other matters relating to borrowings of the association. (2) Matters regarding the detection and prevention of insolvency of members of the association as contemplated by this article. (3) Nonpublic information received from liquidators, receivers, and regulators regarding members of the association. (4) Nonpublic information received from the California Liquidation Office. (5) Proprietary information regarding third-party administrators, vendors that provide products and services in connection with claims administration, or investments made by the association. Proprietary information also includes information which the association and its corresponding out-of-state associations only have access to pursuant to binding contractual confidentiality provisions. (6) Nonpublic financial information regarding members of the association, including information in support of requests for assessment deferrals. (7) Statutory interpretations and other advice received from legal counsel to the association, whether in connection with litigation or otherwise. (8) Appointment, employment, evaluation of performance, or dismissal of any employee or vendor that provides products and services in connection with claims administration of the association. (9) Deliberations concerning the purchase, sale, exchange, or lease of real or personal property, including investment property. (10) Matters posing a threat of criminal or terrorist activity against the association, its personnel, or its property. (11) Covered claims and purported covered claims against the association. (12) Disputes and purported disputes with or involving members of the association. (13) Any other matters as permitted by the commissioner under the association’s approved plan, provided such matters may be heard in a closed meeting or a closed session consistent with Section 11126 of the Government Code. (h) With respect to any closed meeting or session held as permitted by subdivision (g), the association shall do both of the following: (1) Disclose, prior to the closed meeting or the closed session, the general nature of the item or items to be discussed in the closed session. The disclosure may take the form of a reference to the item or items as they are listed by number or letter on the agenda. In the closed session, the board of governors may consider only those matters covered in its disclosure. After any closed session, the board of governors shall reconvene in open session prior to adjournment and shall make any reports, provide any documentation, or make any other disclosures that may be required consistent with this article. The announcements required to be made in open session pursuant to this subdivision may be made at the location announced in the agenda for the closed session, as long as the public is allowed to be present at that location for the purpose of hearing the announcement. (2) Provide periodic reports to the commissioner identifying the matters covered in each such closed meeting or session and the provision of subdivision (g) pursuant to which the subject was discussed. (i) Nothing in this section shall require or authorize the disclosure of names or other information that would constitute an invasion of privacy or otherwise unnecessarily divulge the particular facts concerning the closed session or the disclosure of which is prohibited by state or federal law. (j) The commissioner or his or her designated representative shall be permitted to attend all meetings of the board of governors and its investment and audit committees, specifically including closed meetings and sessions. Any information discussed in closed meetings or sessions shall be treated by the commissioner and his or her designated representatives as confidential pursuant to the provisions of Section 12919. (Added by Stats. 2008, Ch. 407, Sec. 1. Effective January 1, 2009.)
  99. 1063.18.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    CIGA must process a covered claim when the stated requirements are met, and a claimant has one year to challenge a written denial of a nonworkers’ compensation claim.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.18. (a) Nothing in this article requires a final determination of a claim in an insolvent insurer’s liquidation proceeding before a covered claim may be submitted to the California Insurance Guarantee Association (CIGA). Nothing in this article requires a claim to first be determined and approved by the liquidator before CIGA pays and discharges a covered claim. If a claim is presented to the association and all requirements under paragraph (1) of subdivision (c) of Section 1063.1 for processing a covered claim are satisfied, the association shall proceed to process the claim for payment under this article. (b) If the association provides a written denial of a nonworkers’ compensation claim, the person asserting the claim against the association shall have one year to bring an action challenging the denial, including an action for declaratory relief. If the written denial is based on a failure to exhaust other insurance available to pay the claim, a claim shall be reasserted against the association within six months after all other insurance has been exhausted. (Added by Stats. 2015, Ch. 85, Sec. 1. (AB 822) Effective January 1, 2016.)
  100. 1063.19.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    The association may administer the Prescribed Fire Claims Fund only with the commissioner’s prior written approval, and it must not settle or adjust claims while seeking subrogation.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.19. (a) The association may administer the Prescribed Fire Claims Fund established by Section 4500 of the Public Resources Code, subject to prior written approval by the commissioner. The association shall seek the commissioner’s approval by amending the association’s plan of operations in accordance with Section 1063. (b) Upon approval by the commissioner and if contracted to administer the Prescribed Fire Claims Fund by the Department of Forestry and Fire Protection on the department’s behalf, the association is authorized to administer or assist in administering the Prescribed Fire Claims Fund consistent with Section 4500 of the Public Resources Code. The association shall not settle or adjust any claims to the fund while seeking to subrogate against the fund. (c) The state, the association, the association’s member insurers, and officers, directors, agents, and employees of the association or its member insurers shall not be liable for claims for losses described in Section 4500 of the Public Resources Code in excess of the amount in the Prescribed Fire Claims Fund or for the costs of administration, loss adjustment, investigation, and defenses relating to those claims in excess of the amount in the fund. (d) This section shall remain in effect only until January 1, 2028, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2028, deletes or extends that date. (Added by Stats. 2022, Ch. 606, Sec. 1. (SB 926) Effective September 27, 2022. Repealed as of January 1, 2028, by its own provisions.)
  101. 1063.2.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    The association must pay covered claims and may handle them directly or through third parties. It also has specified recovery, subrogation, and claim-handling rights and limits, including rules for priority of recovery and certain claim exclusions.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.2. (a) The association shall pay and discharge covered claims and, in connection therewith, pay for or furnish loss adjustment services and defenses of claimants when required by policy provisions. It may do so either directly by itself or through a servicing facility or through a contract for reinsurance and assumption of liabilities by one or more member insurers or through a contract with the liquidator, upon terms satisfactory to the association and to the liquidator, under which payments on covered claims would be made by the liquidator using funds provided by the association. Alternatively, the association may, with the express approval of the commissioner, reinsure with, or transfer liabilities to, a California admitted and authorized reinsurer or other reinsurer approved by the commissioner to limit or eliminate adverse development, to stabilize or limit the need for assessments, or to reduce its potential ultimate liability for covered claims, provided the association retains the ultimate responsibility to the policyholder or beneficiary for payment of claims covered by the reinsurance agreement. A reinsurance agreement or transfer of liabilities shall be paid for using the association’s available funds from one of its accounts and shall not be charged to administrative expense or allocated to any liquidation estate. The payment and discharge of covered claims shall be undertaken by the association, either directly or through an authorized third-party administrator. Recoveries from a reinsurance agreement or transfer of liabilities shall solely be the property of the association, shall not inure to the benefit of any liquidation estate, and shall be paid to the association account from which the payment for the reinsurance or transfer of liabilities was made. (b) (1) The association shall be a party in interest in all proceedings involving a covered claim, and shall have the same rights as the insolvent insurer would have had if not in liquidation, including, but not limited to, the right to all of the following: (A) Appear, defend, and appeal a claim in a court of competent jurisdiction. (B) Receive notice of, investigate, adjust, compromise, settle, and pay a covered claim. (C) Investigate, handle, and deny a noncovered claim. (2) The association shall have no cause of action against the insureds of the insolvent insurer for any sums it has paid out, except as provided by this article. (3) Paragraph (2) does not limit the association’s right to pursue unpaid reimbursements owed by an employer pursuant to a workers’ compensation insurance policy with a deductible if the employer was obligated to reimburse the insurer for benefits payments and related expenses paid by the insurer or the association from a special deposit or from other association funds pursuant to the terms of the policy and related agreements. (c) (1) If damages against uninsured motorists are recoverable by the claimant from his or her own insurer, the applicable limits of the uninsured motorist coverage shall be a credit against a covered claim payable under this article. A person having a claim that may be recovered under more than one insurance guaranty association or its equivalent shall seek recovery first from the association of the place of residence of the insured, except that if it is a first-party claim for damage to property with a permanent location, he or she shall seek recovery first from the association of the permanent location of the property, and if it is a workers’ compensation claim, he or she shall seek recovery first from the association of the residence of the claimant. A recovery under this article shall be reduced by the amount of recovery from any other insurance guaranty association or its equivalent. A member insurer may recover in subrogation from the association only one-half of any amount paid by that insurer under uninsured motorist coverage for bodily injury or wrongful death (and nothing for a payment for anything else), in those cases where the injured person insured by such an insurer has proceeded under his or her uninsured motorist coverage on the ground that the tortfeasor is uninsured as a result of the insolvency of his or her liability insurer (an insolvent insurer as defined in this article), provided that the member insurer shall waive all rights of subrogation against the tortfeasor. An amount paid a claimant in excess of the amount authorized by this section may be recovered by action, or other proceeding, brought by the association. (2) A claimant having collision coverage on a loss that is covered by the insolvent company’s liability policy shall first proceed against his or her collision carrier. That claimant or the collision carrier, if it is a member of the association, does not have the right to sue or continue a suit against the insured of the insolvent insurance company for that collision damage. (d) The association shall have the right to recover from any person who is an affiliate of the insolvent insurer and whose liability obligations to other persons are satisfied in whole or in part by payments made under this article the amount of any covered claim and allocated claims expense paid on behalf of that person pursuant to this article. (e) A person having a claim or legal right of recovery under any governmental insurance or guaranty program that is also a covered claim, shall be required to first exhaust his or her right under the program. An amount payable on a covered claim shall be reduced by the amount of any recovery under the program. (f) “Covered claims” for unearned premium by lenders under insurance premium finance agreements as defined in Section 673 shall be computed as of the earliest cancellation date of the policy pursuant to Section 673. (g) “Covered claims” shall not include any judgments against or obligations or liabilities of the insolvent insurer or the commissioner, as liquidator, or otherwise resulting from alleged or proven torts, nor shall any default judgment or stipulated judgment against the insolvent insurer, or against the insured of the insolvent insurer, be binding against the association. (h) “Covered claims” shall not include any loss adjustment expenses, including adjustment fees and expenses, attorney’s fees and expenses, court costs, interest, and bond premiums, incurred before the appointment of a liquidator. (Amended by Stats. 2018, Ch. 92, Sec. 154. (SB 1289) Effective January 1, 2019.)
  102. 1063.3.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    The board may make solvency-related recommendations to the commissioner, prepare an insolvency report, and request a report from the Self-Insurers’ Security Fund.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.3. To aid in the detection and prevention of member insurer insolvencies: (a) The board may, upon majority vote, make recommendations to the commissioner on matters pertaining to regulation for solvency. (b) The board may prepare a report on the history and causes of any member insurer insolvency in which the association was obligated to pay covered claims, based on the information available to the association, and submit that report along with any recommendations resulting therefrom to the commissioner. (c) The board may request the Self-Insurers’ Security Fund to prepare, and the Self-Insurers’ Security Fund may provide to the board, a report identifying the aggregate amount of liability, including the estimated exposure for every insurance carrier admitted to transact workers’ compensation insurance in this state, under all specific excess workers’ compensation policies in existence for a given period in this state as reported by the private self-insured employers to the Director of Industrial Relations in the annual reports submitted pursuant to Section 3702.2 of the Labor Code. (Amended by Stats. 2005, Ch. 395, Sec. 2. Effective January 1, 2006.)
  103. 1063.4.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    Certain insureds must cooperate with the association, and covered insureds or claimants who use this article are treated as having assigned certain rights to the association.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.4. (a) Insureds entitled to the protection of this article shall cooperate with the association in accordance with their policies in the same manner as they would have been required to cooperate with their insurer if it were not in liquidation and shall be deemed to have assigned to the association any right to make claim against the liquidator for a refund of unearned premium for the period of coverage provided by the association beginning on the date of the order of liquidation to the date of expiration or cancellation. (b) Any insured or claimant entitled to the benefits of this article who elects to proceed under this article shall be deemed to have assigned to the association his or her rights against the estate of the insolvent insurer. (Amended by Stats. 1994, Ch. 6, Sec. 6. Effective February 10, 1994.)
  104. 1063.5.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    The association must collect premiums from member insurers, allocate claim costs by category, and charge no more than the stated percentage limits unless a bond-related exception applies.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.5. (a) (1) To the extent necessary to secure funds for the association for payment of the administrative expenses of the association, covered claims of insolvent insurers, and for payment of reasonable costs of adjusting the claims, the association shall collect premium payments from its member insurers sufficient to discharge its obligations. (2) The association shall allocate its claim payments and costs, incurred or estimated to be incurred, to one or more of the following categories: (A) Workers’ compensation claims. (B) Homeowners’ claims and automobile claims, including all of the following: (i) Automobile material damage. (ii) Automobile liability (both personal injury and death and property damage). (iii) Medical payments. (iv) Uninsured motorist claims. (C) Claims other than workers’ compensation, homeowners’, and automobile, as defined above. (3) Separate premium payments shall be required for each category. (4) The premium payments for each category shall be used to pay the claims and costs allocated to that category. (b) (1) The rate of premium charged shall be a uniform percentage of net direct written premium in the preceding calendar year applicable to that category. (2) The rate of premium charges to each member insurer in the appropriate categories shall be based on the net direct written premium of each member insurer as shown in the latest year’s annual financial statement on file with the commissioner. (3) In cases of a dispute as to the amount of the net direct written premium between the association and one of its member insurers, the written decision of the commissioner shall be final. (c) Within 90 days after the filing of an annual statement, each member insurer shall file a report to the association indicating the amount of premiums not subject to the association’s premium charge and the amount of special excess workers’ compensation premiums for the preceding calendar year. The report is not required in any year in which a premium charge is not made by the association. (d) In charging premiums to member insurers, the association shall adjust, if necessary, the net direct written premiums shown on a member insurer’s annual statement by excluding any premiums written for any lines of insurance or types of coverage not covered by this article under paragraph (3) of subdivision (c) of Section 1063.1. (e) (1) The premium charged to any member insurer for any of the three categories or a category established by the association shall not be more than 2 percent of the net direct written premium unless there are bonds outstanding that were issued pursuant to Article 14.26 (commencing with Section 1063.70). (2) If bonds issued pursuant to Article 14.26 (commencing with Section 1063.70) are outstanding, the premium charged to a member insurer for the category for which the bond proceeds are being used to pay claims and expenses shall not be more than 1 percent of the net direct written premium for that category. (f) (1) The association may exempt or defer, in whole or in part, the premium charge of any member insurer, if the premium charge would cause the member insurer’s financial statement to reflect an amount of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance. However, during the period of deferment, no dividends shall be paid to shareholders or policyholders by the company whose premium charge was deferred. (2) Deferred premium charges shall be paid when the payment will not reduce capital or surplus below required minimums. (g) After all covered claims of insolvent insurers and expenses of administration have been paid, any unused premiums and any reimbursements or claims dividends from liquidators remaining in any category shall be retained by the association and applied to reduce future premium charges in the appropriate category. (h) The commissioner may suspend or revoke the certificate of authority to transact business in this state of a member insurer that fails to pay a premium when due and after demand has been made. (i) Interest at a rate equal to the current federal reserve discount rate plus 21/2 percent per annum shall be added to the premium of any member insurer that fails to submit the premium requested by the association within 30 days after the mailing request. However, in no event shall the interest rate exceed the legal maximum. (j) This section shall apply only to premium charges paid on or after January 1, 2017. (Amended by Stats. 2022, Ch. 408, Sec. 3. (AB 2154) Effective January 1, 2023.)
  105. 1063.6.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    This section pauses certain court proceedings involving an insolvent insurer for 60 days, and requires the liquidator, receiver, or statutory successor to let the association reasonably access records and provide copies on request.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.6. All proceedings in which the insolvent insurer is a party or is obligated to defend a party in any court in the state shall, subject to waiver by the association in specific cases involving covered claims and subject to waiver by the commissioner as to matters that are not covered claims, be stayed for 60 days from the date that an order of liquidation or an order of receivership with a finding of insolvency has been entered by a superior court in this state or by a court in the state of domicile of the insurer, and an additional time thereafter as may be determined necessary by the court to permit proper defense or conduct of all pending causes of action by the association or the commissioner, as applicable. The stay as to matters to which the insolvent insurer is a party shall be superseded by and when an injunction or stay order is entered by the court in this state having jurisdiction of the liquidation or the ancillary liquidation. The liquidator, receiver, or statutory successor of an insolvent member insurer shall permit reasonable access by the association to the insolvent insurer’s records as is necessary for the association to carry out its duties with regard to covered claims. In addition, the liquidator, receiver, or statutory successor shall provide the association with copies of these records upon the reasonable request of the association and at the expense of the association. (Amended by Stats. 1999, Ch. 83, Sec. 119. Effective January 1, 2000.)
  106. 1063.7.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    When a liquidator is appointed for a member insurer, the liquidator must promptly send notice and must also publish the notice; in some cases an ancillary liquidator can limit notice to available information.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.7. When a liquidator, domiciliary or ancillary, is appointed in this state for any member insurer, the liquidator shall promptly give notice of his or her appointment and a brief description of the contents of this article and of the nature and functions of the association by prepaid first-class mail, to: (a) all persons known or reasonably expected to have or be interested in claims against the insurer, at the last known address within this state; (b) all insureds of the insurer, at the last known address within this state, accompanied by a notice of the date of termination of insurance; and (c) the board of governors of the association. That notice may, but need not be, combined with the notice provided for in Section 1021. When notice is being provided by an ancillary liquidator, notice is only required to the extent information is available to provide the notice. The ancillary liquidator may also rely on the notice provided by the domiciliary liquidator to satisfy the notice requirements of this section. The liquidator may also require that producers of record of the insurer give prompt written notice of the same information, by first-class mail, to their insureds at the last known address within this state. The liquidator shall also promptly publish the notice pursuant to the requirements of Section 1022 and by publication elsewhere in this state as the court shall direct. (Amended by Stats. 2017, Ch. 417, Sec. 9. (AB 1696) Effective January 1, 2018.)
  107. 1063.70.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. )

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    CIGA may request bond issuance from the California Infrastructure and Economic Development Bank and must assess special bond assessments as needed to repay insurance-benefit bonds.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. ) ## 1063.70. The California Insurance Guarantee Association is authorized to pay and discharge certain claims of insolvent insurers as defined in Section 1063.1 through the collection of premiums from its members, which amounts are limited by law and take time to assess and collect. This article provides for the ability of CIGA to request the issuance of bonds by the California Infrastructure and Economic Development Bank pursuant to Article 8 (commencing with Section 63049.6) of Chapter 2 of Division 1 of Title 6.7 of the Government Code to more expeditiously and effectively provide for the payment of covered claims that arise as a result of the insolvencies of insurers admitted to transact insurance in at least one of the categories described in paragraph (2) of subdivision (a) of Section 1063.5. The bonds are to be paid from the special bond assessments assessed by CIGA for those purposes and the other funds provided pursuant to Section 1063.74. Special bond assessments to repay bonds issued for payment of insurance benefits shall be assessed, to the extent necessary, for the respective category for which bonds are issued. It is a public purpose and in the best interest of the public health, safety, and general welfare of the residents of this state to provide for the issuance of bonds to pay claimants and policyholders having covered claims against insolvent insurers operating in this state. (Amended by Stats. 2022, Ch. 408, Sec. 8. (AB 2154) Effective January 1, 2023.)
  108. 1063.71.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. )

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    This section defines several terms used in the article about California Insurance Guarantee Association bond funds.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. ) ## 1063.71. (a) The terms “member insurer,” “insolvent insurer,” and “covered claims” have the meanings assigned those terms in Section 1063.1. (b) “Bank” means the California Infrastructure and Economic Development Bank created pursuant to Article 1 (commencing with Section 63020) of Chapter 2, Division 1 of Title 6.7 of the Government Code. (c) “Board” means the board of governors of CIGA. (d) “Bonds” means bonds issued by the Bank pursuant to Article 8 (commencing with Section 63049.6) of Chapter 2 of Division 1 of Title 6.7 of the Government Code to provide funds for the payment of the covered claims and the adjusting and defense expenses relating to those claims that are issued at the request of the board pursuant to Section 1063.73. (e) “Collateral” means the special bond assessments, the right of CIGA to be paid the special bond assessments, all revenues therefrom, the separate accounts of the Workers’ Compensation Bond Fund, the Homeowners’ and Automobile Bond Fund, and the Other Bond Fund into which special bond assessments are deposited, and the proceeds thereof. (f) “CIGA” means the California Insurance Guarantee Association, established pursuant to Article 14.2 (commencing with Section 1063). (g) “Commissioner” means the Insurance Commissioner. (h) “Department” means the Department of Insurance. (i) “Homeowners’ and Automobile Bond Fund” means the fund created pursuant to subdivision (b) of Section 1063.72. (j) “Other Bond Fund” means the fund created pursuant to subdivision (c) of Section 1063.72. (k) “Special bond assessment” means the premiums collected by CIGA pursuant to Section 1063.74. (l) “Workers’ Compensation Bond Fund” means the fund created pursuant to subdivision (a) of Section 1063.72. (Amended by Stats. 2022, Ch. 408, Sec. 9. (AB 2154) Effective January 1, 2023.)
  109. 1063.72.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. )

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    This section creates three bond funds and limits who can authorize disbursements from their separate accounts.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. ) ## 1063.72. (a) The Workers’ Compensation Bond Fund is hereby created. (1) Proceeds from the sale of bonds with respect to the workers’ compensation category described in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1063.5 shall be deposited in a separate account in the Workers’ Compensation Bond Fund. Only CIGA, and, with respect to payment of the bonds, the trustee for the bonds, shall have the ability to authorize disbursements from the separate account within the Workers’ Compensation Bond Fund. (2) Special bond assessments levied pursuant to Section 1063.74 with respect to the workers’ compensation category shall be deposited in a separate account in the Workers’ Compensation Bond Fund and shall not be commingled with any other moneys. Only the trustee for the bonds shall have the ability to authorize disbursements from this separate account within the Workers’ Compensation Bond Fund, and CIGA shall have no right or authority to authorize disbursements from this separate account. (3) The Workers’ Compensation Bond Fund shall be maintained with the trustee for the bonds. Following payment or provision for payment of the bonds, amounts in the Workers’ Compensation Bond Fund shall be transferred to the fund that is designated in the indenture for the bonds. (4) All money in the Workers’ Compensation Bond Fund and all special bond assessments levied pursuant to Section 1063.74 with respect to the workers’ compensation category shall be used by CIGA for the exclusive purpose of carrying out the purposes of this part. Notwithstanding any other law, the Workers’ Compensation Bond Fund is not a state fund and shall not be subject to the rules or procedures of any fund in the State Treasury, and application of the fund shall not be subject to the supervision or budgetary approval of any officer or division of state government. (5) CIGA and the trustee for the bonds may, as necessary or convenient to the accomplishment of any other purpose under this article, divide the Workers’ Compensation Bond Fund into separate accounts. (b) The Homeowners’ and Automobile Bond Fund is hereby created. (1) Proceeds from the sale of bonds with respect to the homeowners’ and automobile category described in subparagraph (B) of paragraph (2) of subdivision (a) of Section 1063.5 shall be deposited in a separate account in the Homeowners’ and Automobile Bond Fund. Only CIGA, and, with respect to payment of the bonds, the trustee for the bonds, shall have the ability to authorize disbursements from the separate account within the Homeowners’ and Automobile Bond Fund. (2) Special bond assessments levied pursuant to Section 1063.74 with respect to the homeowners’ and automobile category shall be deposited in a separate account in the Homeowners’ and Automobile Bond Fund and shall not be commingled with any other moneys. Only the trustee for the bonds shall have the ability to authorize disbursements from this separate account within the Homeowners’ and Automobile Bond Fund, and CIGA shall have no right or authority to authorize disbursements from this separate account. (3) The Homeowners’ and Automobile Bond Fund shall be maintained with the trustee for the bonds. Following payment or provision for payment of the bonds, amounts in the Homeowners’ and Automobile Bond Fund shall be transferred to the fund that is designated in the indenture for the bonds. (4) All money in the Homeowners’ and Automobile Bond Fund and all special bond assessments levied pursuant to Section 1063.74 with respect to the homeowners’ and automobile category shall be used by CIGA for the exclusive purpose of carrying out the purposes of this part. Notwithstanding any other law, the Homeowners’ and Automobile Bond Fund is not a state fund and shall not be subject to the rules or procedures of any fund in the State Treasury, and application of the fund shall not be subject to the supervision or budgetary approval of any officer or division of state government. (5) CIGA and the trustee for the bonds may, as necessary or convenient to the accomplishment of any other purpose under this article, divide the Homeowners’ and Automobile Bond Fund into separate accounts. (c) The Other Bond Fund is hereby created. (1) Proceeds from the sale of bonds with respect to the other category described in subparagraph (C) of paragraph (2) of subdivision (a) of Section 1063.5 shall be deposited in a separate account in the Other Bond Fund. Only CIGA, and, with respect to payment of the bonds, the trustee for the bonds, shall have the ability to authorize disbursements from the separate account within the Other Bond Fund. (2) Special bond assessments levied pursuant to Section 1063.74 with respect to the other category shall be deposited in a separate account in the Other Bond Fund and shall not be commingled with any other moneys. Only the trustee for the bonds shall have the ability to authorize disbursements from this separate account within the Other Bond Fund, and CIGA shall have no right or authority to authorize disbursements from this separate account. (3) The Other Bond Fund shall be maintained with the trustee for the bonds. Following payment or provision for payment of the bonds, amounts in the Other Bond Fund shall be transferred to the fund that is designated in the indenture for the bonds. (4) All money in the Other Bond Fund and all special bond assessments levied pursuant to Section 1063.74 with respect to the other category shall be used by CIGA for the exclusive purpose of carrying out the purposes of this part. Notwithstanding any other law, the Other Bond Fund is not a state fund and shall not be subject to the rules or procedures of any fund in the State Treasury, and application of the fund shall not be subject to the supervision or budgetary approval of any officer or division of state government. (5) CIGA and the trustee for the bonds may, as necessary or convenient to the accomplishment of any other purpose under this article, divide the Other Bond Fund into separate accounts. (Repealed and added by Stats. 2022, Ch. 408, Sec. 11. (AB 2154) Effective January 1, 2023.)
  110. 1063.73.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. )

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    CIGA may request bond issuance to fund covered claims and related expenses, and the commissioner may change, cancel, or delay the request within 30 days.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. ) ## 1063.73. In the event CIGA determines that the insolvency of one or more member insurers providing insurance in at least one of the categories described in paragraph (2) of subdivision (a) of Section 1063.5 will result in covered claim obligations in excess of CIGA’s capacity to pay from current funds, the board, in its sole discretion, may by resolution request the Bank to issue bonds pursuant to Article 8 (commencing with Section 63049.6) of Chapter 2 of Division 1 of Title 6.7 of the Government Code to provide funds for the payment of the covered claims and the adjusting and defense expenses relating to those claims. Notwithstanding any other provision of law, CIGA is hereby authorized to borrow proceeds of the bonds to provide for those purposes. CIGA may request the Bank to issue bonds pursuant to Article 8 (commencing with Section 63049.6) of Chapter 2 of Division 1 of Title 6.7 of the Government Code. CIGA shall provide the commissioner with a copy of the request and the commissioner may, within 30 days of receipt of the request, modify, cancel, or require a delay in the requested issuance. The proceeds of bonds issued for any category of insurance benefits may be used by CIGA to reimburse funds advanced or temporarily loaned from other categories. (Amended by Stats. 2022, Ch. 408, Sec. 12. (AB 2154) Effective January 1, 2023.)
  111. 1063.74.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. )

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    CIGA may levy special bond assessments on member insurers, and after all covered bonds are redeemed it may not levy or make any further initial special bond assessments.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. ) ## 1063.74. (a) Notwithstanding any other limits on assessments, CIGA shall have the authority to levy upon member insurers special bond assessments in the amount necessary to pay the principal of and interest on the bonds, and to meet other requirements established by agreements relating to the bonds. The assessments shall be collected only from the member insurers providing insurance in the category described in paragraph (2) of subdivision (a) of Section 1063.5 for which the bonds are issued, and shall be applied in the same manner as separate premium payments are used to pay the claims and costs allocated to that category pursuant to Section 1063.5. Special bond assessments made pursuant to this section shall also be subject to the surcharge provisions in Sections 1063.14 and 1063.145. (b) Notwithstanding any other law, after all bonds issued pursuant to this article have been redeemed, no further initial special bond assessments shall be levied or made. Any premium adjustments called for and described in Section 1063.5, as applied to special bond assessments initially charged, shall continue to be made and determined. Any credits or charges that result from the premium adjustments on the special bond assessments shall be credited or charged to the assessments called for and described in Section 1063.5. (c) In addition to the special bond assessments provided for in this section, the board in its discretion and subject to other obligations of the association, may utilize current funds of CIGA, premium assessments made under Section 1063.5, and advances or dividends received from the liquidators of insolvent insurers to pay the principal of and interest on any bonds issued at the board’s request and shall utilize, to the extent feasible, the recoveries from the liquidators of the estates of insolvent insurers in the respective category of insurance to pay bonds issued at the board’s request to fund the corresponding insurance claims in that category of insurance. (Amended by Stats. 2022, Ch. 408, Sec. 13. (AB 2154) Effective January 1, 2023.)
  112. 1063.75.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. )

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    This section limits how California Insurance Guarantee Association bonds may be issued, including a $1.5 billion cap per category and a 20-year maximum maturity.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. ) ## 1063.75. Bonds issued to provide funds for covered claim obligations for workers’ compensation claims, homeowners’ and automobile claims, as described in subparagraph (B) of paragraph (2) of subdivision (a) of Section 1063.5, and other claims, as described in subparagraph (C) of paragraph (2) of subdivision (a) of Section 1063.5, shall be issued in an aggregate principal amount outstanding for each category not to exceed at any one time one billion five hundred million dollars ($1,500,000,000) for that category. Any bonds issued or issued to refund bonds shall not have a final maturity exceeding 20 years from the date of issuance. The bonds shall be issued at the request of CIGA, shall be in the form, shall bear the date or dates, and shall mature at the time or times as the indenture authorized by the request may provide. The bonds may be issued in one or more series, as serial bonds or as term bonds, or as a combination thereof, and, notwithstanding any other provision of law, the amount of principal of, or interest on, bonds maturing at each date of maturity need not be equal. The bonds shall bear interest at the rate or rates, variable or fixed or a combination thereof, be in the denominations, be in the form, either coupon or registered, carry the registration privileges, be executed in the manner, be payable in the medium of payment at the place or places within or without the state, be subject to the terms of redemption, contain the terms and conditions, and be secured by the covenants as the indenture may provide. The indenture may provide for the proceeds of the bonds and funds securing the bonds to be invested in any securities and investments, including investment agreements, as specified therein. CIGA may enter into or authorize any ancillary obligations or derivative agreements as it determines necessary or desirable to manage interest rate risk or security features related to the bonds. The bonds shall be sold at public or private sale by the Treasurer at, above, or below the principal amount thereof, on the terms and conditions and for the consideration in the medium of payment that the Treasurer shall determine prior to the sale. (Amended by Stats. 2022, Ch. 408, Sec. 14. (AB 2154) Effective January 1, 2023.)
  113. 1063.76.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. )

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    The section requires member insurers to pay special bond assessments to the bond trustee, holds CIGA’s collateral in trust, and protects the bond lien and collateral from interference.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. ) ## 1063.76. (a) The collateral shall be used solely for the purpose of paying the principal and redemption price of, and interest on, the bonds and any amounts owing by CIGA under contracts entered into pursuant to Section 1063.77, and shall not be used for any other purpose. Member insurers shall pay the special bond assessments directly to the trustee for the bonds. Any collateral in the possession of CIGA shall be held by CIGA in trust for the benefit of the trustee for the bonds. (b) Upon the issuance of the first bond, the collateral shall be subject to a first priority statutory lien in favor of the trustee for the bonds, for the benefit of the holders of the bonds and the parties to the contracts entered into pursuant to Section 1063.77, to secure the payment of the principal and redemption price of, and interest on, the bonds and any amounts owing by CIGA under contracts entered into pursuant to Section 1063.77. This lien shall arise by operation of law automatically without any action on the part of CIGA, the bank, or any other person. This lien is a continuous lien on all collateral effective from the time the first bond is issued, whether or not a particular item of collateral exists at the time of the issuance. From the time the first bond is issued, this lien shall be valid, effective, prior, perfected, binding, and enforceable against CIGA, its successors, purchasers of the collateral, creditors, and all others asserting rights in the collateral, irrespective of whether those parties have notice of the lien and without the need for any physical delivery, recordation, filing, or further act. Upon default in the payment of the principal or redemption price of, or interest on, the bonds, or any amounts owing by CIGA under contracts entered into pursuant to Section 1063.77, the trustee for the bonds shall be entitled to foreclose or otherwise enforce this lien on the collateral. (c) No person acting under any provision of law or principle of equity shall be permitted in any way to impede or in any manner interfere with (1) the full and timely payment of the principal and redemption price of, and interest on, the bonds and any amounts owing by CIGA under contracts entered into pursuant to Section 1063.77, or (2) the statutory lien created by this section and the full and timely application of the collateral to the payment of the principal and redemption price of, and interest on, the bonds and any amounts owing by CIGA under contracts entered into pursuant to Section 1063.77. (d) None of the collateral shall be subject to garnishment, levy, execution, attachment, or other process, writ (including writ of mandate), or remedy in connection with the assertion or enforcement of any debt, claim, settlement, or judgment against the state, the department, the commissioner, the bank, CIGA, or the board, nor shall any of the collateral be subject to the claims of any creditor of the state, the department, the commissioner, the bank, CIGA, or the board. This paragraph shall not limit the rights or remedies of the trustee for the bonds, the holders of the bonds, or the parties to contracts entered into pursuant to Section 1063.77. (e) As long as any bond is outstanding, CIGA shall not be subject to Article 14 (commencing with Section 1010) or Article 14.3 (commencing with Section 1064.1) of Chapter 1 of Part 2 of Division 1 of the Insurance Code. (Added by Stats. 2003, Ch. 635, Sec. 7. Effective January 1, 2004.)
  114. 1063.77.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. )

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    CIGA may enter into contracts or agreements with banks, insurers, or other financial institutions or parties when it decides doing so is necessary or desirable for bond security, marketability, or risk management.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. ) ## 1063.77. CIGA is authorized to enter into those contracts or agreements with those banks, insurers, or other financial institutions or parties that it determines are necessary or desirable to improve the security and marketability of, or to manage interest rates or other risks associated with, the bonds issued pursuant to Article 8 (commencing with Section 63049.6) of Chapter 2 of Division 1 of Title 6.7 of the Government Code. Those contracts or agreements may contain an obligation to reimburse, with interest, any of those banks, insurers, or other financial institutions or parties for advances used to pay the purchase price of, or principal or interest on, the bonds or other obligations. (Added by Stats. 2003, Ch. 635, Sec. 7. Effective January 1, 2004.)
  115. 1063.78.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. )

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    If the board asks the California Infrastructure and Economic Development Bank to issue bonds, the board must report specified information to two insurance committees within 60 days and then annually while the bonds are outstanding.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.26. California Insurance Guarantee Association Bond Funds [1063.70 - 1063.78] ( Heading of Article 14.26 amended by Stats. 2022, Ch. 408, Sec. 7. ) ## 1063.78. If the board requests the California Infrastructure and Economic Development Bank to issue bonds pursuant to Section 1063.70, the board shall report all of the following to the Assembly Committee on Insurance and the Senate Committee on Insurance within 60 days of the request, and annually thereafter while the bonds remain outstanding: (a) The amount of the bonds requested. (b) The reason for the requested bonds. (c) Details of covered claims obligations requiring the issuance of bonds. (d) Planned bond repayment assessments. (Added by Stats. 2022, Ch. 408, Sec. 15. (AB 2154) Effective January 1, 2023.)
  116. 1063.8.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    The association is exempt from specified state and local taxes, and commissioner rules may also exempt it from certain insurance-code 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.8. Notwithstanding any other provision of law, the association shall be exempt from all license fees, income, franchise, privilege, property, or occupation taxes levied or assessed by this state, any municipality, county, or other political subdivision of this state. The rules of the commissioner promulgated pursuant to this article may exempt the association from: filing an annual statement, maintaining minimum required capital, paying any fees or reimbursements, or meeting any other requirement or doing any other thing required by this code or other laws relating to insurance. (Amended by Stats. 1970, Ch. 1205.)
  117. 1063.9.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. )

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    The association is subject to the commissioner’s regulation, and the commissioner has inspection powers over its affairs and records. A member insurer may appeal an association decision to the commissioner within 30 days, then seek court relief after administrative remedies are exhausted.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.2. California Insurance Guarantee Association [1063 - 1063.19] ( Article 14.2 added by Stats. 1969, Ch. 1347. ) ## 1063.9. (a) The operation of the association shall at all times be subject to the regulation of the commissioner. The commissioner, or any deputy or examiner, or any person whom the commissioner shall appoint, shall have the power of visitation and examination into the affairs of the association and free access to all books, papers, and documents that relate to the business of the association, may summon and qualify witnesses under oath, and may examine officers, agents or employees, or any other person having knowledge of the affairs, transactions, or conditions of the association. (b) Any member insurer aggrieved by any action or decision of the association may appeal to the commissioner within 30 days after the action or decision of the association and after exhaustion of administrative remedies may seek court relief as provided in Section 12940. (Amended by Stats. 1970, Ch. 1205.)
  118. 1064.1.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    This section defines key terms used in the Uniform Liquidation Act for insurance proceedings.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.1. For the purposes of this act: (a) “Insurer” means any person subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization, or conservation by the commissioner or the equivalent insurance supervisory official of another state. (b) “Delinquency proceeding” means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving that insurer. (c) “Foreign country” means territory not in any state. (d) “Domiciliary state” means the state in which an insurer is incorporated or organized, or, in the case of an insurer incorporated or organized in a foreign country, the state in which the insurer, having become authorized to do business in the state, has, at the commencement of delinquency proceedings, the largest amount of its assets held in trust and assets held on deposit for the benefit of its policyholders or policyholders and creditors in the United States; and any such insurer is deemed to be domiciled in such state. (e) “Ancillary state” means any state other than a domiciliary state. (f) “Reciprocal state” means any state other than this state in which in substance and effect the provisions of this act are in force, including the provisions requiring that the commissioner or equivalent insurance supervisory official be the receiver of a delinquent insurer. A “reciprocal state” includes any state also which has, through its commissioner or equivalent supervisory official, entered into a binding and enforceable written agreement with the commissioner of this state which provides that (1) a commissioner or equivalent supervisory official is required to be the receiver of a delinquent insurer; (2) title to assets of the delinquent insurer shall vest in the domiciliary receiver, as of the date of any court order appointing him or her as receiver, and he or she shall have the same rights to recover those assets as provided under subdivision (b) of Section 1064.3; (3) nondomiciliary creditors may file and prove their claims before ancillary receivers; (4) the laws of the domiciliary state of the delinquent insurer shall be applied uniformly to residents and nonresidents in the allowance of preference of claims, except for claims to special deposits created under the laws of the domiciliary state; (5) preferences (including attachments, garnishments, and liens) for creditors with advance information shall be prevented; and (6) the domiciliary receiver may sue in the reciprocal state to recover any assets of a delinquent insurer to which he or she may be entitled under the law. (g) “General assets” means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or limited class or classes of persons, and as to such specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and assets held on deposit for the security or benefit of all policyholders or all policyholders and creditors in the United States, shall be deemed general assets. (h) “Preferred claim” means any claim with respect to which the law of a state accords priority of payment from the general assets of the insurer. (i) “Special deposit claim” means any claim secured by a deposit made for the security or benefit of a limited class or classes of persons, but not including any general assets. (j) “Secured claim” means any claim secured by mortgage, trust, deed, pledge, deposit as security, escrow, or otherwise, but not including special deposit claims or claims against general assets. The term also includes claims, which more than four months prior to the commencement of delinquency proceedings in the state of the insurer’s domicile, have become liens upon specific assets by reason of judicial process. (k) “Receiver” means receiver, liquidator, rehabilitator, or conservator as the context may require. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  119. 1064.10.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    A domiciliary receiver of an insurer from a reciprocal state may sue in this state to recover assets the receiver is entitled to under state law.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.10. The domiciliary receiver of an insurer domiciled in a reciprocal state may sue in this state to recover any assets of that insurer to which he or she may be entitled under the laws of this state. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  120. 1064.11.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    This section says the article is severable: if part of it is held invalid, the rest still stands 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.11. If any provision of this article or the application thereof to any person or circumstances is held invalid, that invalidity shall not affect other provisions or applications of the article which can be given effect without the invalid provision or application, and to this end the provisions of this article are declared to be severable. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  121. 1064.12.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    This section names the Uniform Insurers Rehabilitation Act and says it should be interpreted to make the law uniform across enacting states.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.12. (a) This article may be referred to as the “Uniform Insurers Rehabilitation Act.” (b) The Uniform Insurers Rehabilitation Act shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it. To the extent that its provisions, when applicable, conflict with Article 14 (commencing with Section 1010), the provisions of this article shall control. The provisions of Article 14 (commencing with Section 1010) not in conflict with this article shall be unaffected by it. (c) This article does not apply in regard to insurers domiciled in any state that is not a reciprocal state, and to any insurer domiciled in a reciprocal state before that state appoints a domiciliary receiver for the insurer. All those insurers shall be governed by Article 14 (commencing with Section 1010). If a domiciliary receiver is appointed in a reciprocal state while a receivership is proceeding under Article 14 (commencing with Section 1010), the receiver under that article shall thereafter act as ancillary receiver under Section 1064.3. (d) This article shall not apply to the State Compensation Insurance Fund. (Amended by Stats. 2006, Ch. 740, Sec. 4.2. Effective January 1, 2007.)
  122. 1064.13.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    This section tells the commissioner when to stop, pause, or resume charging fees and assessments after liquidation, conservation, or administrative supervision notices.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.13. (a) Upon receipt of a notice of liquidation the commissioner shall cease imposing, billing or collecting fees and assessments against the subject company pursuant to this code. (b) Upon receipt of a notice of conservation or administrative supervision the commissioner may cease to impose, bill, or collect fees against the subject company pursuant to this code. Following the date the order has been lifted the commissioner may once again impose, bill, or collect fees against the subject company. (c) Upon receipt of a notice of liquidation all outstanding invoices, billings or assessments pursuant to this code prior to the date of the notice shall be cancelled. (d) Upon issuance of a notice of conservation or administrative supervision, outstanding amounts due from the subject company imposed prior to the date of the conservation or administrative supervision, may be held in abeyance and remain unpaid until the conservation or administrative supervision is terminated. Late filing fees accrued pursuant to Section 12995 of this code shall not be imposed. (e) If it is determined that an insurer is in any of the conditions enumerated in Section 1011, and it is determined that all available funds are needed to pay policyholders, the commissioner may suspend the imposition of fees or assessments until the condition of the insurer has improved to the extent where payment of fees or assessments will not harm policyholders. (Added by Stats. 2006, Ch. 740, Sec. 4.4. Effective January 1, 2007.)
  123. 1064.2.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    When an insurer in delinquency proceedings needs a receiver, the court must appoint the commissioner, and the receiver must take control of the insurer’s assets and administer them under the court’s orders.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.2. (a) Whenever under the laws of this state a receiver is to be appointed in delinquency proceedings for an insurer domiciled in this state, the court shall appoint the commissioner as receiver. Upon the appointment, the court shall direct the receiver forthwith to take possession of the assets of the insurer and to administer them under the orders of the court. (b) The domiciliary receiver and his or her successors in office shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records of the insurer wherever located, as of the date of the order of his or her appointment, and he or she shall have the right to recover the same and reduce them to possession; except that ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers which are prescribed in this article for ancillary receivers appointed in this state as to assets located in this state. The filing or recording of the order appointing the receiver or certified copy thereof, in the office where instruments affecting title to property are required to be filed or recorded shall impart the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded. The domiciliary receiver shall be responsible on his or her official bond for the proper administration of all assets coming into his or her possession or control. (c) Upon taking possession of the assets of a delinquent insurer the domiciliary receiver shall, subject to the direction of the court, and in accordance with those procedures that the receiver may petition the court to establish, immediately proceed to conduct the business of the insurer or to take the steps authorized by the laws of this state for the purpose of liquidating, rehabilitating, reorganizing, or conserving the affairs of the insurer. In connection with delinquency proceedings, he or she may appoint one or more special deputy commissioners to act for him or her, and may employ clerks and assistants as he or she deems necessary. The compensation of the special deputies, clerks, or assistants and all expenses of taking possession of the delinquent insurer and of conducting the delinquency proceedings shall be fixed by the receiver, subject to the approval of the court, and shall be paid out of the funds or assets of the insurer. Within the limits of the duties imposed upon them, special deputies shall possess all the powers given to them, and, in the exercise of those powers, shall be subject to all of the duties imposed upon the receiver with respect to delinquency proceedings. (Amended by Stats. 1995, Ch. 893, Sec. 3. Effective January 1, 1996.)
  124. 1064.3.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    This section requires the court to appoint the commissioner as ancillary receiver in qualifying delinquency proceedings, sets out when the commissioner must seek that appointment, and gives the ancillary and domiciliary receivers specific rights and duties over the insurer’s assets.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.3. (a) Whenever under the laws of this state an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled in this state, the court shall appoint the commissioner as ancillary receiver. The commissioner shall file an application requesting the appointment (1) if he or she finds that there are sufficient assets of that insurer located in this state, or that there are sufficient persons residing in this state having claims against that insurer, to justify the appointment of an ancillary receiver, or (2) if 10 or more persons resident in this state having claims against that insurer file an application with the commissioner requesting the appointment of an ancillary receiver. (b) The domiciliary receiver of an insurer domiciled in a reciprocal state, shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records of the insurer located in this state, and he or she shall have the immediate right to recover balances due from local agents and to obtain possession of any books and records of the insurer found in this state. He or she shall also be entitled to recover the other assets of the insurer located in this state except that upon the appointment of an ancillary receiver in this state, the ancillary receiver shall, during the ancillary receivership proceedings, have the sole right to recover such other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings. All remaining assets shall be promptly transferred to the domiciliary receiver. Subject to the foregoing provisions, the ancillary receiver and his or her deputies shall have the same powers and be subject to the same duties with respect to the administration of such assets, as a receiver of an insurer domiciled in this state. (c) Notwithstanding any other provision of this article, in any ancillary receivership proceeding in this state against an insurer domiciled in a reciprocal state, assets located in this state which comprise all or part of any deposit by that insurer under the laws of that reciprocal state for the benefit and security of beneficiaries of awards of workers’ compensation against insurers shall be returned promptly to the domiciliary receiver, if he or she so requests, without deduction of any amounts to satisfy claims of policyholders and creditors. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  125. 1064.4.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    In a delinquency proceeding, claimants in reciprocal states may file claims with the ancillary receiver or domiciliary receiver, but claims must be filed by the deadline set in the domiciliary proceeding.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.4. (a) In a delinquency proceeding begun in this state against an insurer domiciled in this state, claimants residing in reciprocal states may file claims either with the ancillary receivers, if any in their respective states, or with the domiciliary receiver. All claims shall be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings. (b) Controverted claims belonging to claimants residing in reciprocal states may either (1) be proved in this state as provided by law, or (2), if ancillary proceedings have been commenced in those reciprocal states, be proved in those proceedings. In the event a claimant elects to prove his or her claim in ancillary proceedings, if notice of the claim and opportunity to appear and be heard is afforded the domiciliary receiver of this state as provided in Section 1064.5 with respect to ancillary proceedings in this state, the final allowance of such claim by the courts in the ancillary state shall be accepted in this state as conclusive as to its amount, and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within the ancillary state. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  126. 1064.5.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    Resident claimants in a delinquency proceeding may file claims with the ancillary receiver or the domiciliary receiver, and related notices and deadlines must be followed.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.5. (a) In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, claimants against such insurer who reside within this state may file claims either with the ancillary receiver, if any, appointed in this state, or with the domiciliary receiver. All such claims shall be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceeding. (b) Controverted claims belonging to claimants residing in this state may either (1) be proved in the domiciliary state as provided by the laws of that state, or (2), if ancillary proceedings have been commenced in this state, be proved in those proceedings. In the event that any such claimant elects to prove his or her claim in this state, he or she shall file his or her claim with the ancillary receiver in the manner provided by the law of this state for the proving of claims against insurers domiciled in this state, and he or she shall give notice in writing to the receiver in the domiciliary state, either by registered mail or by personal service at least 40 days prior to the date set for hearing. The notice shall contain a concise statement of the amount of the claim, the facts on which the claim is based, and the priorities asserted, if any. If the domiciliary receiver, within 30 days after the giving of notice, shall give notice in writing to the ancillary receiver and to the claimant, either by registered mail or by personal service, of his or her intention to contest that claim, he or she shall be entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim. The final allowance of the claim by the courts of this state shall be accepted as conclusive as to its amount, and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within this state. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  127. 1064.6.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    In insurer delinquency proceedings, certain claims must be treated as preferred claims and paid with equal priority, depending on whether the other state gives similar priority.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.6. (a) In a delinquency proceeding against an insurer domiciled in this state, claims owing to residents of ancillary states shall be preferred claims if like claims are preferred under the laws of this state. All such claims, whether owing to residents or nonresidents, shall be given equal priority of payment from general assets regardless of where such assets are located. (b) In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of this state shall be preferred if like claims are preferred by the laws of that state. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  128. 1064.7.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    Owners of special deposit claims get priority against those deposits when an insurer has a receiver appointed; if the deposit is deficient, claimants may later share in general assets subject to a deferral rule.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.7. The owners of special deposit claims against an insurer for which a receiver is appointed in this or any other state shall be given priority against their several special deposits in accordance with the provisions governing the creation and maintenance of such deposits. If there is a deficiency in any such deposit so that the claims secured thereby are not fully discharged therefrom, the claimants may share in the general assets, but, unless applicable law provides otherwise, the sharing shall be deferred until general creditors, and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  129. 1064.8.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    An owner of a secured claim may give up the security and file the claim as a general creditor, or let the claim be satisfied from the security.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.8. The owner of a secured claim against an insurer for which a receiver has been appointed in this or any other state may surrender his or her security and file his or her claim as a general creditor, or the claim may be discharged by resort to the security, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. If the amount of the deficiency has been adjudicated in ancillary proceedings as provided in this article, or if it has been adjudicated by a court of competent jurisdiction in proceedings in which the domiciliary receiver has had notice and opportunity to be heard, that amount shall be conclusive; otherwise the amount shall be determined in the delinquency proceeding in the domiciliary state. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  130. 1064.9.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. )

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    While delinquency proceedings are pending, lawsuits like attachment, garnishment, or execution cannot be started or continued against the delinquent insurer or its assets in this state.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.3. Uniform Liquidation Act [1064.1 - 1064.13] ( Article 14.3 added by Stats. 1988, Ch. 1466, Sec. 1. ) ## 1064.9. During the pendency of delinquency proceedings in this or any reciprocal state, no action or proceeding in the nature of an attachment, garnishment, or execution shall be commenced or maintained in the courts of this state against the delinquent insurer or its assets. Any lien obtained by any such action or proceeding within four months prior to the commencement of any such delinquency proceeding or at any time thereafter shall be void as against any rights arising in such delinquency proceeding. (Added by Stats. 1988, Ch. 1466, Sec. 1.)
  131. 1065.1.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. )

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    The commissioner may issue orders after a public hearing when a covered person appears insolvent, hazardous, or engaged in conduct that could lead to conservation or liquidation proceedings.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. ) ## 1065.1. Whenever the commissioner has reasonable cause to believe, and determines, after a public hearing, that any person specified in Section 1010 is conducting its business and affairs in such a manner as to threaten to render it insolvent, or that it is in a hazardous condition, or is conducting its business and affairs in a manner which is hazardous to its policyholders, creditors or the public, or that it has committed or engaged in, or is committing or engaging in, any act, practice, or transaction which under any provision of this code would constitute ground rendering the person subject to conservation or liquidation proceedings, he may make and serve upon the person such order or orders as shall be reasonably necessary to correct, eliminate or remedy such conduct, condition or ground. The commissioner shall serve notice of any hearing required by this article upon the person, stating the time and place therefor, and the conduct, condition or ground upon which the commissioner would make his order. The hearing shall occur not less than 20 nor more than 30 days after notice is served upon the person. (Added by Stats. 1965, Ch. 1579.)
  132. 1065.2.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. )

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    The commissioner may issue a cease-and-desist order without notice and before a hearing if specified conduct or conditions exist and immediate action is needed to avoid irreparable loss or injury.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. ) ## 1065.2. (a) Whenever it appears to the commissioner that any conduct, condition or ground set forth in Section 1065.1 exists, and that irreparable loss and injury to the property and business of a person specified in Section 1010 has occurred or may occur unless the commissioner acts immediately, the commissioner may, without notice, and before hearing, issue and cause to be served upon such person an order requiring such person to forthwith cease and desist from engaging further in the acts, practices or transactions which are causing such conduct, condition or ground to exist. (b) At the same time an order is served pursuant to subdivision (a) of this section, the commissioner shall issue and also serve upon the person a notice of hearing to be held at a time and place fixed therein which shall not be less than 20 or more than 30 days after the service thereof. The notice shall contain a statement of the conduct, condition or ground which the commissioner deems violative of the provisions of Section 1065.1. (c) At any time prior to the commencement of a hearing as provided in Section 1065.1 or subdivision (b) of this section, the person may waive the hearing and have judicial review of the order by means of any remedy afforded by law without first exhausting administrative remedies or procedures. (Added by Stats. 1965, Ch. 1579.)
  133. 1065.3.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. )

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    After a hearing, the commissioner must issue whatever corrective order is reasonably necessary, and may also order reimbursement of investigation and prosecution costs.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. ) ## 1065.3. If, after hearing as provided by Section 1065.1 or subdivision (b) of Section 1065.2, any of the statements as to conduct, conditions, or grounds in the notice are found to be true, the commissioner shall make an order or orders as may be reasonably necessary to correct, eliminate, or remedy the conduct, conditions, or grounds. As part of the order or orders, the commissioner may also order the person to whom the order is directed to fully reimburse the commissioner for the commissioner’s costs in investigating, examining, and prosecuting the matter. An order of reimbursement shall be enforced as provided in Section 1065.5. (Amended by Stats. 1999, Ch. 782, Sec. 1. Effective January 1, 2000.)
  134. 1065.4.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. )

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    A person subject to an order or proceeding under this article can seek judicial review, and the review proceeding must be started within 60 days after the order is made and served.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. ) ## 1065.4. Any person subject to an order or proceeding pursuant to this article shall be entitled to judicial review of the order or proceeding by means of any remedy afforded by law. Proceedings for judicial review shall be commenced within 60 days from the making and service of any order issued pursuant to Sections 1065.1 or 1065.3. (Added by Stats. 1965, Ch. 1579.)
  135. 1065.5.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. )

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    If a person disobeys a final commissioner order, the commissioner may hold a hearing and then order a daily forfeiture and start proceedings to suspend or revoke the person’s license or certificate of authority.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. ) ## 1065.5. If any person violates or fails to comply with any order of the commissioner or any part thereof which as to such person has become final and is still in effect, the commissioner may, after a hearing, notice of which shall be given in accordance with the provisions of Section 1065.1, at which it is determined that a violation of such order has been committed, further order that: (a) Such person shall forfeit and pay to the State of California a sum not to exceed one hundred dollars ($100) per day for each and every day that such violation or failure to comply shall continue, but in no event to exceed a maximum amount of five thousand dollars ($5,000). Such liability shall be enforced in an action brought in any court of competent jurisdiction by the commissioner in the name of the people of the State of California; and that (b) Proceedings be commenced to revoke or suspend any license or certificate of authority held by such person under this code, in accordance with the procedures provided therefor. (Added by Stats. 1965, Ch. 1579.)
  136. 1065.6.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. )

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    The commissioner’s powers under this article are additional to other powers and remedies the commissioner already has by law.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. ) ## 1065.6. The powers vested in the commissioner by this article shall be additional to any and all other powers and remedies vested in the commissioner by law, and nothing herein shall be construed as requiring that the commissioner shall employ the powers conferred herein instead of or as a condition precedent to the exercise of any other power or remedy vested in the commissioner. (Added by Stats. 1965, Ch. 1579.)
  137. 1065.7.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. )

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    An order or notice of the commissioner may be served on any person in the same manner and with the same effect as service in a superior court civil action.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.5. Stop Order Power of the Commissioner [1065.1 - 1065.7] ( Article 14.5 enacted by Stats. 1965, Ch. 1579. ) ## 1065.7. Any order or notice of the commissioner hereunder may be served on any person, in the same manner and with the same effect as provided for in civil actions in a superior court of this state. (Added by Stats. 1965, Ch. 1579.)
  138. 1068.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.8. Group Enrollment from Health Care Service Plans [1068 - 1068.2] ( Article 14.8 added by Stats. 1990, Ch. 1043, Sec. 11. )

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    If a health care service plan becomes insolvent, certain participating carriers must give the group’s enrollees a 30-day enrollment period and must offer the same coverages and rates they offered at the last open enrollment period.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.8. Group Enrollment from Health Care Service Plans [1068 - 1068.2] ( Article 14.8 added by Stats. 1990, Ch. 1043, Sec. 11. ) ## 1068. (a) As used in this section, the following definitions shall apply: (1) “Health care service plan” means any plan as defined in Section 1345 of the Health and Safety Code, but this section does not apply to specialized health care service contracts. (2) “Carrier” means a health care service plan, an insurer issuing group disability coverage which covers hospital, medical, or surgical expenses, a nonprofit hospital service plan, or any other entity responsible for either the payment of benefits for or the provision of hospital, medical, and surgical benefits under a group contract. (3) “Insolvency” means that the Director of the Department of Managed Health Care has determined that the health care service plan is not financially able to provide health care services to its enrollees and (A) the Director of the Department of Managed Health Care has taken an action pursuant to Section 1386, 1391, or 1399 of the Health and Safety Code, or (B) an order requested by the Director of the Department of Managed Health Care or the Attorney General has been issued by the superior court under Section 1392, 1393, or 1394.1 of the Health and Safety Code. (b) In the event of the insolvency of a health care service plan, upon order of the commissioner which shall be issued following his or her receipt of a notice issued by the Director of the Department of Managed Health Care pursuant to Section 1394.7 of the Health and Safety Code, any insurer, nonprofit hospital service plan, and any other entity, other than a health care service plan, responsible for either the payment of benefits for or the provision of hospital, medical, and surgical benefits under a group contract, that participated in the enrollment process with the insolvent health care service plan at the last regular open enrollment period of a group, shall offer enrollees of the group in the insolvent health care service plan a 30-day enrollment period commencing upon the date of insolvency. Each such carrier shall offer enrollees of the group in the insolvent health care service plan the same coverages and rates that it offered to enrollees of the group at the last regular open enrollment period of the group. (Amended by Stats. 2000, Ch. 857, Sec. 57. Effective January 1, 2001.)
  139. 1068.1.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.8. Group Enrollment from Health Care Service Plans [1068 - 1068.2] ( Article 14.8 added by Stats. 1990, Ch. 1043, Sec. 11. )

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    If a specialized health care service plan becomes insolvent, participating carriers must give affected enrollees a 30-day enrollment period and offer the same specialized coverage and rates previously offered.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.8. Group Enrollment from Health Care Service Plans [1068 - 1068.2] ( Article 14.8 added by Stats. 1990, Ch. 1043, Sec. 11. ) ## 1068.1. (a) As used in this section: (1) “Carrier” means a specialized health care service plan, and any of the following entities which offer coverage comparable to the coverages offered by a specialized health care service plan: an insurer issuing group disability coverage; a nonprofit hospital service plan; or other entity responsible for either the payment of benefits for or the provision of services under a group contract. (2) “Insolvency” means that the Director of the Department of Managed Health Care has determined that the specialized health care service plan is not financially able to provide specialized health care services to its enrollees and (A) the Director of the Department of Managed Health Care has taken an action pursuant to Section 1386, 1391, or 1399 of the Health and Safety Code, or (B) an order requested by the commissioner or the Attorney General has been issued by the superior court under Section 1392, 1393, or 1394.1 of the Health and Safety Code. (3) “Specialized health care service plan” means any plan authorized to issue only specialized health care service plan contracts as defined in Section 1345 of the Health and Safety Code. (b) In the event of the insolvency of a specialized health care service plan, upon order of the commissioner which shall be issued following his or her receipt of a notice issued by the Director of the Department of Managed Health Care pursuant to Section 1394.8 of the Health and Safety Code, all carriers that participated in the enrollment process with the insolvent specialized health care service plan at a group’s last regular open enrollment period for the same type of specialized health care service benefits shall offer the group’s enrollees in the insolvent specialized health care service plan a 30-day enrollment period commencing upon the date of insolvency. Each such carrier shall offer enrollees of the insolvent specialized health care service plan the same specialized coverage and rates that it had offered to the enrollees of the group at its last regular open enrollment period. (Amended by Stats. 2000, Ch. 857, Sec. 58. Effective January 1, 2001.)
  140. 1068.2.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.8. Group Enrollment from Health Care Service Plans [1068 - 1068.2] ( Article 14.8 added by Stats. 1990, Ch. 1043, Sec. 11. )

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    The commissioner may assess penalties for violations of this article, and a court may also assess them in a civil action.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 14.8. Group Enrollment from Health Care Service Plans [1068 - 1068.2] ( Article 14.8 added by Stats. 1990, Ch. 1043, Sec. 11. ) ## 1068.2. (a) The commissioner shall have the administrative authority to assess penalties against any person, including a natural person or other entity, for violations of this article. (b) Upon a showing of a violation of this article in any civil action, a court may also assess the penalties prescribed in this section. (c) Whenever the commissioner has reasonable cause to believe or determines after a public hearing that any person has violated this article he or she shall make and serve upon the person an notice of hearing. The notice shall state the commissioner’s intent to assess the administrative penalties, the time and place of the hearing, and the conduct, condition or grounds upon which the commissioner is holding the hearing and assessing the penalties. The hearings shall occur within 30 days after the notice is served. Within 30 days after the hearing the commissioner shall issue an order specifying the penalty. The penalties resulting from the hearing shall be paid to the Insurance Fund, but may be spent only when appropriated by the Legislature. (d) Any person who violates this article is liable for administrative penalties of no less than twenty-five thousand dollars ($25,000). (Added by Stats. 1990, Ch. 1043, Sec. 11.)
  141. 107.

    ## 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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    Plate glass insurance includes insurance against breakage of glass.

    ## 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. ) ## 107. Plate glass insurance includes insurance against breakage of glass. (Enacted by Stats. 1935, Ch. 145.)
  142. 1070.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. )

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    An insurer may apply to withdraw from the state if it pays the fees and costs, surrenders its certificate of authority to the commissioner, and submits a written, properly executed and acknowledged application with evidence of authority.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. ) ## 1070. Any insurer, upon payment of the fees and costs therefor and surrender to the commissioner of its certificate of authority, may apply to withdraw from this State. Such application shall be in writing, duly executed, accompanied by evidence of due authority for such execution, and properly acknowledged. (Enacted by Stats. 1935, Ch. 145.)
  143. 1070.5.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. )

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    An admitted insurer must apply to withdraw and withdraw from the state if it loses, cancels, or revokes its certificate of authority, or if it stops doing insurance business in the state.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. ) ## 1070.5. Whenever an admitted insurer fails to take any step necessary to maintain continuance of its certificate of authority, or whenever the certificate of authority admitting an insurer is canceled or revoked, or whenever an admitted insurer as an entity ceases doing an insurance business in this state for any reason, such insurer shall apply to withdraw as an insurer and shall withdraw as such insurer from this state pursuant to this article. Every certificate of authority hereafter granted is so granted subject to this withdrawal requirement. Acceptance of every such certificate of authority is an agreement by the accepting insurer that it will conform to the provisions of this article. (Amended by Stats. 1965, Ch. 1191.)
  144. 1070.6.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. )

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    This section exempts certain insurers from the article’s withdrawal procedure and fees if merger, consent, filing, payment, and other stated conditions are met.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. ) ## 1070.6. The withdrawal procedure and fees prescribed by this article shall not be required of a nonsurviving admitted constituent to a merger or consolidation into another admitted insurer in accordance with the applicable statutes and the commissioner’s prior written consent given pursuant to subdivision (c) of Section 1011, provided the commissioner is satisfied by documents, authenticated so as to be admissible in evidence over objection, filed with him or her, that: (a) The constituent has discharged all of its liabilities to residents of this state in the manner provided by Section 1071.5; (b) There will be an admitted insurer directly available to the constituent’s policyholders: (1) to obtain policy changes and endorsements, (2) to receive payment of premiums and refund unearned premiums, (3) to serve notice of claim, proof of loss, summons, process, and other papers, and (4) for purposes of suit; (c) The constituent shall timely file with the commissioner appropriate financial statements reporting its insurance business done in this state during the calendar year of the merger or consolidation and all appropriate tax returns required by law for the period, and shall timely pay all taxes found to be due on account of the business; and (d) The constituent has surrendered its current California certificate of authority to the commissioner for cancellation as of the effective date of the merger. The withdrawal procedure and fees prescribed by this article shall not be required of an insurer that has been liquidated by a final order of a court of record of this or any sister state provided a certified copy of the order reciting the fact of liquidation and discharge of all obligations has been filed with the commissioner. (Amended by Stats. 2013, Ch. 321, Sec. 11. (AB 1391) Effective January 1, 2014.)
  145. 10700.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 1. Definitions [10700 - 10701] ( Article 1 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    This section defines key terms used in the small employer health insurance chapter.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 1. Definitions [10700 - 10701] ( Article 1 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10700. As used in this chapter: (a) “Agent or broker” means a person or entity licensed under Chapter 5 (commencing with Section 1621) of Part 2 of Division 1. (b) “Benefit plan design” means a specific health coverage product issued by a carrier to small employers, to trustees of associations that include small employers, or to individuals if the coverage is offered through employment or sponsored by an employer. It includes services covered and the levels of copayment and deductibles, and it may include the professional providers who are to provide those services and the sites where those services are to be provided. A benefit plan design may also be an integrated system for the financing and delivery of quality health care services which has significant incentives for the covered individuals to use the system. (c) “Board” means the Major Risk Medical Insurance Board. (d) “Carrier” means any disability insurance company or any other entity that writes, issues, or administers health benefit plans that cover the employees of small employers, regardless of the situs of the contract or master policyholder. For the purposes of Articles 3 (commencing with Section 10719) and 4 (commencing with Section 10730), “carrier” also includes health care service plans. (e) “Dependent” means the spouse or child of an eligible employee, subject to applicable terms of the health benefit plan covering the employee, and includes dependents of guaranteed association members if the association elects to include dependents under its health coverage at the same time it determines its membership composition pursuant to subdivision (z). (f) “Eligible employee” means either of the following: (1) Any permanent employee who is actively engaged on a full-time basis in the conduct of the business of the small employer with a normal workweek of at least 30 hours, in the small employer’s regular place of business, who has met any statutorily authorized applicable waiting period requirements. The term does not include sole proprietors or the spouses of those sole proprietors, partners of a partnership or the spouses of those partners, or employees who work on a part-time, temporary, or substitute basis. It includes any eligible employee, as defined in this paragraph, who obtains coverage through a guaranteed association. Employees of employers purchasing through a guaranteed association are eligible employees if they would otherwise meet the definition except for the number of persons employed by the employer. A permanent employee who works at least 20 hours but not more than 29 hours is an eligible employee if all four of the following apply: (A) The employee otherwise meets the definition of an eligible employee except for the number of hours worked. (B) The employer offers the employee health coverage under a health benefit plan. (C) All similarly situated individuals are offered coverage under the health benefit plan. (D) The employee shall have worked at least 20 hours per normal workweek for at least 50 percent of the weeks in the previous calendar quarter. The insurer may request any necessary information to document the hours and time period in question, including, but not limited to, payroll records and employee wage and tax filings. (2) Any member of a guaranteed association as defined in subdivision (z). (g) “Enrollee” means an eligible employee or dependent who receives health coverage through the program from a participating carrier. (h) “Financially impaired” means, for the purposes of this chapter, a carrier that, on or after the effective date of this chapter, is not insolvent and is either: (1) Deemed by the commissioner to be potentially unable to fulfill its contractual obligations. (2) Placed under an order of rehabilitation or conservation by a court of competent jurisdiction. (i) “Fund” means the California Small Group Reinsurance Fund. (j) “Health benefit plan” means a policy or contract written or administered by a carrier that arranges or provides health care benefits for the covered eligible employees of a small employer and their dependents. The term does not include accident only, credit, disability income, coverage of Medicare services pursuant to contracts with the United States government, Medicare supplement, long-term care insurance, dental, vision, coverage issued as a supplement to liability insurance, automobile medical payment insurance, or insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance. (k) “In force business” means an existing health benefit plan issued by the carrier to a small employer. (l) “Late enrollee” means an eligible employee or dependent who has declined health coverage under a health benefit plan offered by a small employer at the time of the initial enrollment period provided under the terms of the health benefit plan and who subsequently requests enrollment in a health benefit plan of that small employer, provided that the initial enrollment period shall be a period of at least 30 days. It also means any member of an association that is a guaranteed association as well as any other person eligible to purchase through the guaranteed association when that person has failed to purchase coverage during the initial enrollment period provided under the terms of the guaranteed association’s health benefit plan and who subsequently requests enrollment in the plan, provided that the initial enrollment period shall be a period of at least 30 days. However, an eligible employee, another person eligible for coverage through a guaranteed association pursuant to subdivision (z), or an eligible dependent shall not be considered a late enrollee if any of the following is applicable: (1) The individual meets all of the following requirements: (A) He or she was covered under another employer health benefit plan, the Healthy Families Program, the Access for Infants and Mothers (AIM) Program, or the Medi-Cal program at the time the individual was eligible to enroll. (B) He or she certified at the time of the initial enrollment that coverage under another employer health benefit plan, the Healthy Families Program, the AIM Program, or the Medi-Cal program was the reason for declining enrollment provided that, if the individual was covered under another employer health plan, the individual was given the opportunity to make the certification required by this subdivision and was notified that failure to do so could result in later treatment as a late enrollee. (C) He or she has lost or will lose coverage under another employer health benefit plan as a result of termination of employment of the individual or of a person through whom the individual was covered as a dependent, change in employment status of the individual, or of a person through whom the individual was covered as a dependent, the termination of the other plan’s coverage, cessation of an employer’s contribution toward an employee or dependent’s coverage, death of the person through whom the individual was covered as a dependent, legal separation, or divorce; or he or she has lost or will lose coverage under the Healthy Families Program, the AIM Program, or the Medi-Cal program. (D) He or she requests enrollment within 30 days after termination of coverage or employer contribution toward coverage provided under another employer health benefit plan, or requests enrollment within 60 days after termination of Medi-Cal program coverage, AIM Program coverage, or Healthy Families Program coverage. (2) The individual is employed by an employer who offers multiple health benefit plans and the individual elects a different plan during an open enrollment period. (3) A court has ordered that coverage be provided for a spouse or minor child under a covered employee’s health benefit plan. (4) (A) In the case of an eligible employee as defined in paragraph (1) of subdivision (f), the carrier cannot produce a written statement from the employer stating that the individual or the person through whom an individual was eligible to be covered as a dependent, prior to declining coverage, was provided with, and signed acknowledgment of, an explicit written notice in boldface type specifying that failure to elect coverage during the initial enrollment period permits the carrier to impose, at the time of the individual’s later decision to elect coverage, an exclusion from coverage for a period of 12 months as well as a six-month preexisting condition exclusion unless the individual meets the criteria specified in paragraph (1), (2), or (3). (B) In the case of an eligible employee who is a guaranteed association member, the plan cannot produce a written statement from the guaranteed association stating that the association sent a written notice in boldface type to all potentially eligible association members at their last known address prior to the initial enrollment period informing members that failure to elect coverage during the initial enrollment period permits the plan to impose, at the time of the member’s later decision to elect coverage, an exclusion from coverage for a period of 12 months as well as a six-month preexisting condition exclusion unless the member can demonstrate that he or she meets the requirements of subparagraphs (A), (C), and (D) of paragraph (1) or meets the requirements of paragraph (2) or (3). (C) In the case of an employer or person who is not a member of an association, was eligible to purchase coverage through a guaranteed association, and did not do so, and would not be eligible to purchase guaranteed coverage unless purchased through a guaranteed association, the employer or person can demonstrate that he or she meets the requirements of subparagraphs (A), (C), and (D) of paragraph (1), or meets the requirements of paragraph (2) or (3), or that he or she recently had a change in status that would make him or her eligible and that application for coverage was made within 30 days of the change. (5) The individual is an employee or dependent who meets the criteria described in paragraph (1) and was under a COBRA continuation provision and the coverage under that provision has been exhausted. For purposes of this section, the definition of “COBRA” set forth in subdivision (e) of Section 10116.5 shall apply. (6) The individual is a dependent of an enrolled eligible employee who has lost or will lose his or her coverage under the Healthy Families Program, the AIM Program, or the Medi-Cal program and requests enrollment within 60 days after termination of that coverage. (7) The individual is an eligible employee who previously declined coverage under an employer health benefit plan and who has subsequently acquired a dependent who would be eligible for coverage as a dependent of the employee through marriage, birth, adoption, or placement for adoption, and who enrolls for coverage under that employer health benefit plan on his or her behalf and on behalf of his or her dependent within 30 days following the date of marriage, birth, adoption, or placement for adoption, in which case the effective date of coverage shall be the first day of the month following the date the completed request for enrollment is received in the case of marriage, or the date of birth, or the date of adoption or placement for adoption, whichever applies. Notice of the special enrollment rights contained in this paragraph shall be provided by the employer to an employee at or before the time the employee is offered an opportunity to enroll in plan coverage. (8) The individual is an eligible employee who has declined coverage for himself or herself or his or her dependents during a previous enrollment period because his or her dependents were covered by another employer health benefit plan at the time of the previous enrollment period. That individual may enroll himself or herself or his or her dependents for plan coverage during a special open enrollment opportunity if his or her dependents have lost or will lose coverage under that other employer health benefit plan. The special open enrollment opportunity shall be requested by the employee not more than 30 days after the date that the other health coverage is exhausted or terminated. Upon enrollment, coverage shall be effective not later than the first day of the first calendar month beginning after the date the request for enrollment is received. Notice of the special enrollment rights contained in this paragraph shall be provided by the employer to an employee at or before the time the employee is offered an opportunity to enroll in plan coverage. (m) “New business” means a health benefit plan issued to a small employer that is not the carrier’s in force business. (n) “Participating carrier” means a carrier that has entered into a contract with the program to provide health benefits coverage under this part. (o) “Plan of operation” means the plan of operation of the fund, including articles, bylaws, and operating rules adopted by the fund pursuant to Article 3 (commencing with Section 10719). (p) “Program” means the Health Insurance Plan of California. (q) “Preexisting condition provision” means a policy provision that excludes coverage for charges or expenses incurred during a specified period following the insured’s effective date of coverage, as to a condition for which medical advice, diagnosis, care, or treatment was recommended or received during a specified period immediately preceding the effective date of coverage. (r) “Creditable coverage” means: (1) Any individual or group policy, contract, or program, that is written or administered by a disability insurer, health care service plan, fraternal benefits society, self-insured employer plan, or any other entity, in this state or elsewhere, and that arranges or provides medical, hospital, and surgical coverage not designed to supplement other private or governmental plans. The term includes continuation or conversion coverage but does not include accident only, credit, coverage for onsite medical clinics, disability income, Medicare supplement, long-term care, dental, vision, coverage issued as a supplement to liability insurance, insurance arising out of a workers’ compensation or similar law, automobile medical payment insurance, or insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance. (2) The federal Medicare Program pursuant to Title XVIII of the federal Social Security Act (42 U.S.C. Sec. 1395 et seq.). (3) The Medicaid program pursuant to Title XIX of the federal Social Security Act (42 U.S.C. Sec. 1396 et seq.). (4) Any other publicly sponsored program, provided in this state or elsewhere, of medical, hospital, and surgical care. (5) Chapter 55 (commencing with Section 1071) of Title 10 of the United States Code (Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)). (6) A medical care program of the Indian Health Service or of a tribal organization. (7) A state health benefits risk pool. (8) A health plan offered under Chapter 89 (commencing with Section 8901) of Title 5 of the United States Code (Federal Employees Health Benefits Program (FEHBP)). (9) A public health plan as defined in federal regulations authorized by Section 2701(c)(1)(I) of the federal Public Health Service Act, as amended by Public Law 104-191, the federal Health Insurance Portability and Accountability Act of 1996. (10) A health benefit plan under Section 5(e) of the federal Peace Corps Act (22 U.S.C. Sec. 2504(e)). (11) Any other creditable coverage as defined by subdivision (c) of Section 2701 of Title XXVII of the federal Public Health Service Act (42 U.S.C. Sec. 300gg(c)). (s) “Rating period” means the period for which premium rates established by a carrier are in effect and shall be no less than six months. (t) “Risk adjusted employee risk rate” means the rate determined for an eligible employee of a small employer in a particular risk category after applying the risk adjustment factor. (u) “Risk adjustment factor” means the percent adjustment to be applied equally to each standard employee risk rate for a particular small employer, based upon any expected deviations from standard claims. The factor may not be more than 110 percent or less than 90 percent. (v) “Risk category” means the following characteristics of an eligible employee: age, geographic region, and family size of the employee, plus the benefit plan design selected by the small employer. (1) No more than the following age categories may be used in determining premium rates: Under 30 30–39 40–49 50–54 55–59 60–64 65 and over. However, for the 65 years of age and over category, separate premium rates may be specified depending upon whether coverage under the health benefit plan will be primary or secondary to benefits provided by the federal Medicare Program pursuant to Title XVIII of the federal Social Security Act. (2) Small employer carriers shall base rates to small employers using no more than the following family size categories: (A) Single. (B) Married couple. (C) One adult and child or children. (D) Married couple and child or children. (3) (A) In determining rates for small employers, a carrier that operates statewide shall use no more than nine geographic regions in the state, have no region smaller than an area in which the first three digits of all its ZIP Codes are in common within a county, and shall divide no county into more than two regions. Carriers shall be deemed to be operating statewide if their coverage area includes 90 percent or more of the state’s population. Geographic regions established pursuant to this section shall, as a group, cover the entire state, and the area encompassed in a geographic region shall be separate and distinct from areas encompassed in other geographic regions. Geographic regions may be noncontiguous. (B) In determining rates for small employers, a carrier that does not operate statewide shall use no more than the number of geographic regions in the state than is determined by the following formula: the population, as determined in the last federal census, of all counties that are included in their entirety in a carrier’s service area divided by the total population of the state, as determined in the last federal census, multiplied by nine. The resulting number shall be rounded to the nearest whole integer. A region shall not be smaller than an area in which the first three digits of all its ZIP Codes are in common within a county and a county shall not be divided into more than two regions. The area encompassed in a geographic region shall be separate and distinct from areas encompassed in other geographic regions. Geographic regions may be noncontiguous. A carrier shall not have less than one geographic area. (w) “Small employer” means either of the following: (1) Any person, proprietary or nonprofit firm, corporation, partnership, public agency, or association that is actively engaged in business or service that, on at least 50 percent of its working days during the preceding calendar quarter, or preceding calendar year, employed at least 2, but not more than 50, eligible employees, the majority of whom were employed within this state, that was not formed primarily for purposes of buying health insurance and in which a bona fide employer-employee relationship exists. In determining whether to apply the calendar quarter or calendar year test, the insurer shall use the test that ensures eligibility if only one test would establish eligibility. However, for purposes of subdivisions (b) and (h) of Section 10705, the definition shall include employers with at least two eligible employees. In determining the number of eligible employees, companies that are affiliated companies and that are eligible to file a combined income tax return for purposes of state taxation shall be considered one employer. Subsequent to the issuance of a health benefit plan to a small employer pursuant to this chapter, and for the purpose of determining eligibility, the size of a small employer shall be determined annually. Except as otherwise specifically provided, provisions of this chapter that apply to a small employer shall continue to apply until the health benefit plan anniversary following the date the employer no longer meets the requirements of this definition. It includes any small employer as defined in this paragraph who purchases coverage through a guaranteed association, any employer purchasing coverage for employees through a guaranteed association, and any small employer as defined in this paragraph who purchases coverage through any arrangement, but does not include multiple employer welfare arrangements regulated pursuant to Article 4.7 (commencing with Section 742.20) of Chapter 1 of Part 2 of Division 1 that provide health care benefits to their members on a self-funded or partially self-funded basis and that comply with small group health reforms. (2) Any guaranteed association, as defined in subdivision (y), that purchases health coverage for members of the association. (x) “Standard employee risk rate” means the rate applicable to an eligible employee in a particular risk category in a small employer group. (y) “Guaranteed association” means a nonprofit organization comprised of a group of individuals or employers who associate based solely on participation in a specified profession or industry, accepting for membership any individual or employer meeting its membership criteria which (1) includes one or more small employers as defined in paragraph (1) of subdivision (w), (2) does not condition membership directly or indirectly on the health or claims history of any person, (3) uses membership dues solely for and in consideration of the membership and membership benefits, except that the amount of the dues shall not depend on whether the member applies for or purchases insurance offered by the association, (4) is organized and maintained in good faith for purposes unrelated to insurance, (5) has been in active existence on January 1, 1992, and for at least five years prior to that date, (6) has been offering health insurance to its members for at least five years prior to January 1, 1992, (7) has a constitution and bylaws, or other analogous governing documents that provide for election of the governing board of the association by its members, (8) offers any benefit plan design that is purchased to all individual members and employer members in this state, (9) includes any member choosing to enroll in the benefit plan design offered to the association provided that the member has agreed to make the required premium payments, and (10) covers at least 1,000 persons with the carrier with which it contracts. The requirement of 1,000 persons may be met if component chapters of a statewide association contracting separately with the same carrier cover at least 1,000 persons in the aggregate. This subdivision applies regardless of whether a master policy by an admitted insurer is delivered directly to the association or a trust formed for or sponsored by an association to administer benefits for association members. For purposes of this subdivision, an association formed by a merger of two or more associations after January 1, 1992, and otherwise meeting the criteria of this subdivision shall be deemed to have been in active existence on January 1, 1992, if its predecessor organizations had been in active existence on January 1, 1992, and for at least five years prior to that date and otherwise met the criteria of this subdivision. (z) “Members of a guaranteed association” means any individual or employer meeting the association’s membership criteria if that person is a member of the association and chooses to purchase health coverage through the association. At the association’s discretion, it may also include employees of association members, association staff, retired members, retired employees of members, and surviving spouses and dependents of deceased members. However, if an association chooses to include those persons as members of the guaranteed association, the association must so elect in advance of purchasing coverage from a plan. Health plans may require an association to adhere to the membership composition it selects for up to 12 months. (aa) “Affiliation period” means a period that, under the terms of the health benefit plan, shall elapse before health care services under the plan become effective. (Amended by Stats. 2018, Ch. 700, Sec. 7. (SB 1375) Effective January 1, 2019.)
  146. 10701.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 1. Definitions [10700 - 10701] ( Article 1 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    This section says certain specified-disease and hospital-confinement policies are excluded from the chapter’s definition of “health benefit plan” only if the carrier files a yearly certification and meets the listed disclosure and marketing requirements.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 1. Definitions [10700 - 10701] ( Article 1 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10701. (a) For purposes of this chapter, “health benefit plan” does not include policies or certificates of specified disease or hospital confinement indemnity provided that the carrier offering those policies or certificates complies with the following: (1) The carrier files, on or before March 1 of each year, a certification with the commissioner that contains the statement and information described in paragraph (2). (2) The certification required in paragraph (1) shall contain the following: (A) A statement from the carrier certifying that policies or certificates described in this section (i) are being offered and marketed as supplemental health insurance and not as a substitute for hospital or medical expense insurance, health care service plans, or major medical expense insurance, (ii) the disclosure forms as described in Section 10603 contains the following statement prominently on the first page: “This is a supplement to health insurance. It is not a substitute for hospital or medical expense insurance, a health maintenance organization (HMO) contract, or major medical expense insurance,” and (iii) are not being offered, marketed, or sold in a manner that would make the purchase of the policies contingent upon the sale of any product sold under Sections 10700 and 10718, or under Section 1357 of the Health and Safety Code. (B) A summary description of each policy or certificate described in this section, including the average annual premium rates, or range of premium rates in cases where premiums vary by age, gender, or other factors, charged for the policies and certificates in this state. (3) In the case of a policy or certificate that is described in this section and that is offered for the first time in this state on or after January 1, 1997, the carrier files with the commissioner the information and statement required in paragraph (2) at least 30 days prior to the date such a policy or certificate is issued or delivered in this state. (b) As used in this section, “policies or certificates of specified disease” and “policies or certificates of hospital confinement indemnity” mean policies or certificates of insurance sold to an insured to supplement other health insurance coverage as specified in this section. An insurer issuing a “policy or certificate of specified disease” or a “policy or certificate of hospital confinement indemnity” shall require that the person to be insured is covered by an individual or group policy or contract that arranges or provides medical, hospital, and surgical coverage not designed to supplement other private or governmental plans. (Added by Stats. 1996, Ch. 544, Sec. 2. Effective January 1, 1997.)
  147. 10702.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    Carriers that write, issue, or administer health benefit plans covering employees of small employers are subject to this chapter if either a small employer pays any premium or reimburses any premium, or the plan is treated as part of a plan or program under Internal Revenue Code Sections 106 or 162.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10702. All carriers writing, issuing, or administering health benefit plans that cover employees of small employers shall be subject to this chapter if any one of the following conditions are met: (a) Any portion of the premium for any health benefit plan or benefits is paid by a small employer, or any covered individual is reimbursed, whether through wage adjustments or otherwise, by a small employer for any portion of the premium. (b) The health benefit plan is treated by the small employer or any of the covered individuals as part of a plan or program for the purposes of Section 106 or 162 of the Internal Revenue Code. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  148. 10702.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Covered persons or entities must follow the standards in the cited Family Code and Welfare and Institutions Code provisions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10702.1. Any person or entity subject to the requirements of this chapter shall comply with the standards set forth in Chapter 7 (commencing with Section 3750) of Part 1 of Division 9 of the Family Code and Section 14124.94 of the Welfare and Institutions Code. (Amended by Stats. 1996, Ch. 1062, Sec. 23. Effective January 1, 1997.)
  149. 10703.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The commissioner has authority to decide whether a health benefit plan is covered by this chapter and whether an employer is a small employer under Section 10700.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10703. The commissioner shall have the authority to determine whether a health benefit plan is covered by this chapter, and to determine whether an employer is a small employer within the meaning of Section 10700. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  150. 10704.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    The commissioner may issue necessary regulations, and must share proposed regulations with the Director of the Department of Managed Health Care before public comment. The director has 30 days to send written comments, those comments must be included in the public notice, and the director enforces the regulations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10704. The commissioner may issue regulations that are necessary to carry out the purposes of this chapter. Prior to the public comment period required on the regulations under the Administrative Procedure Act, the commissioner shall provide the Director of the Department of Managed Health Care with a copy of the proposed regulations. The Director of the Department of Managed Health Care shall have 30 days to notify the commissioner in writing of any comments on the regulations. The Director of the Department of Managed Health Care’s comments shall be included in the public notice issued on the regulations. Any rules and regulations issued pursuant to this subdivision may be adopted as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). Until December 31, 1994, the adoption of these regulations shall be deemed an emergency and necessary for the immediate preservation of the public peace, health, safety, or general welfare. The regulations shall be enforced by the director. (Amended by Stats. 2000, Ch. 857, Sec. 67. Effective January 1, 2001.)
  151. 10705.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Carriers and agents/brokers selling small-employer health coverage must follow filing, marketing, disclosure, and nondiscrimination rules, and carriers generally need commissioner approval before coverage forms are issued or delivered.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10705. Upon the effective date of this act: (a) No group or individual policy or contract or certificate of group insurance or statement of group coverage providing benefits to employees of small employers as defined in this chapter shall be issued or delivered by a carrier subject to the jurisdiction of the commissioner regardless of the situs of the contract or master policyholder or of the domicile of the carrier nor, except as otherwise provided in Sections 10270.91 and 10270.92, shall a carrier provide coverage subject to this chapter until a copy of the form of the policy, contract, certificate, or statement of coverage is filed with and approved by the commissioner in accordance with Sections 10290 and 10291, and the carrier has complied with the requirements of Section 10717. (b) (1) Each carrier, except a self-funded employer, shall fairly and affirmatively offer, market, and sell all of the carrier’s benefit plan designs that are sold to, offered through, or sponsored by, small employers or associations that include small employers to all small employers in each geographic region in which the carrier makes coverage available or provides benefits. (2) A carrier contracting to participate in the Voluntary Alliance Uniting Employers Purchasing Program shall be deemed to be in compliance with paragraph (1) for a benefit plan design offered through the program in those geographic regions in which the carrier participates in the program and the benefit plan design is offered exclusively through the program. (3) (A) A carrier shall be deemed to meet the requirements of paragraph (1) and subdivision (c) with respect to a benefit plan design that qualifies as a grandfathered health plan under Section 1251 of PPACA if all of the following requirements are met: (i) The carrier offers to renew the benefit plan design, unless the carrier withdraws the benefit plan design from the small employer market pursuant to subdivision (e) of Section 10713. (ii) The carrier provides appropriate notice of the grandfathered status of the benefit plan design in any materials provided to an insured of the design describing the benefits provided under the design, as required under PPACA. (iii) The carrier makes no changes to the benefits covered under the benefit plan design other than those required by a state or federal law, regulation, rule, or guidance and those permitted to be made to a grandfathered health plan under PPACA. (B) For purposes of this paragraph, “PPACA” means the federal Patient Protection and Affordable Care Act (Public Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), and any rules, regulations, or guidance issued thereunder. For purposes of this paragraph, a “grandfathered health plan” shall have the meaning set forth in Section 1251 of PPACA. (4) Nothing in this section shall be construed to require an association, or a trust established and maintained by an association to receive a master insurance policy issued by an admitted insurer and to administer the benefits thereof solely for association members, to offer, market or sell a benefit plan design to those who are not members of the association. However, if the association markets, offers or sells a benefit plan design to those who are not members of the association it is subject to the requirements of this section. This shall apply to an association that otherwise meets the requirements of paragraph (8) formed by merger of two or more associations after January 1, 1992, if the predecessor organizations had been in active existence on January 1, 1992, and for at least five years prior to that date and met the requirements of paragraph (5). (5) A carrier which (A) effective January 1, 1992, and at least 20 years prior to that date, markets, offers, or sells benefit plan designs only to all members of one association and (B) does not market, offer or sell any other individual, selected group, or group policy or contract providing medical, hospital and surgical benefits shall not be required to market, offer, or sell to those who are not members of the association. However, if the carrier markets, offers or sells any benefit plan design or any other individual, selected group, or group policy or contract providing medical, hospital and surgical benefits to those who are not members of the association it is subject to the requirements of this section. (6) Each carrier that sells health benefit plans to members of one association pursuant to paragraph (5) shall submit an annual statement to the commissioner which states that the carrier is selling health benefit plans pursuant to paragraph (5) and which, for the one association, lists all the information required by paragraph (7). (7) Each carrier that sells health benefit plans to members of any association shall submit an annual statement to the commissioner which lists each association to which the carrier sells health benefit plans, the industry or profession which is served by the association, the association’s membership criteria, a list of officers, the state in which the association is organized, and the site of its principal office. (8) For purposes of paragraphs (4) and (5), an association is a nonprofit organization comprised of a group of individuals or employers who associate based solely on participation in a specified profession or industry, accepting for membership any individual or small employer meeting its membership criteria, which do not condition membership directly or indirectly on the health or claims history of any person, which uses membership dues solely for and in consideration of the membership and membership benefits, except that the amount of the dues shall not depend on whether the member applies for or purchases insurance offered by the association, which is organized and maintained in good faith for purposes unrelated to insurance, which has been in active existence on January 1, 1992, and at least five years prior to that date, which has a constitution and bylaws, or other analogous governing documents which provide for election of the governing board of the association by its members, which has contracted with one or more carriers to offer one or more health benefit plans to all individual members and small employer members in this state. (c) Each carrier shall make available to each small employer all benefit plan designs that the carrier offers or sells to small employers or to associations that include small employers. Notwithstanding subdivision (d) of Section 10700, for purposes of this subdivision, companies that are affiliated companies or that are eligible to file a consolidated income tax return shall be treated as one carrier. (d) Each carrier shall do all of the following: (1) Prepare a brochure that summarizes all of its benefit plan designs and make this summary available to small employers, agents and brokers upon request. The summary shall include for each benefit plan design information on benefits provided, a generic description of the manner in which services are provided, such as how access to providers is limited, benefit limitations, required copayments and deductibles, standard employee risk rates, an explanation of how creditable coverage is calculated if a preexisting condition or affiliation period is imposed, and a telephone number that can be called for more detailed benefit information. Carriers are required to keep the information contained in the brochure accurate and up to date, and, upon updating the brochure, send copies to agents and brokers representing the carrier. Any entity that provides administrative services only with regard to a benefit plan design written or issued by another carrier shall not be required to prepare a summary brochure which includes that benefit plan design. (2) For each benefit plan design, prepare a more detailed evidence of coverage and make it available to small employers, agents and brokers upon request. The evidence of coverage shall contain all information that a prudent buyer would need to be aware of in making selections of benefit plan designs. An entity that provides administrative services only with regard to a benefit plan design written or issued by another carrier shall not be required to prepare an evidence of coverage for that benefit plan design. (3) Provide to small employers, agents, and brokers, upon request, for any given small employer the sum of the standard employee risk rates and the sum of the risk adjusted standard employee risk rates. When requesting this information, small employers, agents and brokers shall provide the carrier with the information the carrier needs to determine the small employer’s risk adjusted employee risk rate. (4) Provide copies of the current summary brochure to all agents or brokers who represent the carrier and, upon updating the brochure, send copies of the updated brochure to agents and brokers representing the carrier for the purpose of selling health benefit plans. (5) Notwithstanding subdivision (d) of Section 10700, for purposes of this subdivision, companies that are affiliated companies or that are eligible to file a consolidated income tax return shall be treated as one carrier. (e) Every agent or broker representing one or more carriers for the purpose of selling health benefit plans to small employers shall do all of the following: (1) When providing information on a health benefit plan to a small employer but making no specific recommendations on particular benefit plan designs: (A) Advise the small employer of the carrier’s obligation to sell to any small employer any of the benefit plan designs it offers to small employers and provide them, upon request, with the actual rates that would be charged to that employer for a given benefit plan design. (B) Notify the small employer that the agent or broker will procure rate and benefit information for the small employer on any benefit plan design offered by a carrier for whom the agent or broker sells health benefit plans. (C) Notify the small employer that, upon request, the agent or broker will provide the small employer with the summary brochure required in paragraph (1) of subdivision (d) for any benefit plan design offered by a carrier whom the agent or broker represents. (2) When recommending a particular benefit plan design or designs, advise the small employer that, upon request, the agent will provide the small employer with the brochure required by paragraph (1) of subdivision (d) containing the benefit plan design or designs being recommended by the agent or broker. (3) Prior to filing an application for a small employer for a particular health benefit plan: (A) For each of the benefit plan designs offered by the carrier whose benefit plan design the agent or broker is presenting, provide the small employer with the benefit summary required in paragraph (1) of subdivision (d) and the sum of the standard employee risk rates for that particular employer. (B) Notify the small employer that, upon request, the agent or broker will provide the small employer with an evidence of coverage brochure for each benefit plan design the carrier offers. (C) Notify the small employer that, from July 1, 1993, to July 1, 1996, actual rates may be 20 percent higher or lower than the sum of the standard employee risk rates, and from July 1, 1996, and thereafter, actual rates may be 10 percent higher or lower than the sum of the standard employee risk rates depending on how the carrier assesses the risk of the small employer’s group. (D) Notify the small employer that, upon request, the agent or broker will submit information to the carrier to ascertain the small employer’s sum of the risk adjusted standard employee risk rate for any benefit plan design the carrier offers. (E) Obtain a signed statement from the small employer acknowledging that the small employer has received the disclosures required by this paragraph and Section 10716. (f) No carrier, agent, or broker shall induce or otherwise encourage a small employer to separate or otherwise exclude an eligible employee from a health benefit plan which, in the case of an eligible employee meeting the definition in paragraph (1) of subdivision (f) of Section 10700, is provided in connection with the employee’s employment or which, in the case of an eligible employee as defined in paragraph (2) of subdivision (f) of Section 17000, is provided in connection with a guaranteed association. (g) No carrier shall reject an application from a small employer for a benefit plan design provided: (1) The small employer as defined by paragraph (1) of subdivision (w) of Section 10700 offers health benefits to 100 percent of its eligible employees as defined in paragraph (1) of subdivision (f) of Section 10700. Employees who waive coverage on the grounds that they have other group coverage shall not be counted as eligible employees. (2) The small employer agrees to make the required premium payments. (h) No carrier or agent or broker shall, directly or indirectly, engage in the following activities: (1) Encourage or direct small employers to refrain from filing an application for coverage with a carrier because of the health status, claims experience, industry, occupation, or geographic location within the carrier’s approved service area of the small employer or the small employer’s employees. (2) Encourage or direct small employers to seek coverage from another carrier or the program because of the health status, claims experience, industry, occupation, or geographic location within the carrier’s approved service area of the small employer or the small employer’s employees. (i) No carrier shall, directly or indirectly, enter into any contract, agreement, or arrangement with an agent or broker that provides for or results in the compensation paid to an agent or broker for a health benefit plan to be varied because of the health status, claims experience, industry, occupation, or geographic location of the small employer or the small employer’s employees. This subdivision shall not apply with respect to a compensation arrangement that provides compensation to an agent or broker on the basis of percentage of premium, provided that the percentage shall not vary because of the health status, claims experience, industry, occupation, or geographic area of the small employer. (j) Except in the case of a late insured, or for satisfaction of a preexisting condition clause in the case of initial coverage of an eligible employee, a disability insurer may not exclude any eligible employee or dependent who would otherwise be entitled to health care services on the basis of any of the following: the health status, the medical condition, including both physical and mental illnesses, the claims experience, the medical history, the genetic information, or the disability or evidence of insurability, including conditions arising out of acts of domestic violence of that employee or dependent. No health benefit plan may limit or exclude coverage for a specific eligible employee or dependent by type of illness, treatment, medical condition, or accident, except for preexisting conditions as permitted by Section 10198.7 or 10708. (k) If a carrier enters into a contract, agreement, or other arrangement with a third-party administrator or other entity to provide administrative, marketing, or other services related to the offering of health benefit plans to small employers in this state, the third-party administrator shall be subject to this chapter. (l) (1) With respect to the obligation to provide coverage newly issued under subdivision (d), the carrier may cease enrolling new small employer groups and new eligible employees as defined by paragraph (2) of subdivision (f) of Section 10700 if it certifies to the commissioner that the number of eligible employees and dependents, of the employers newly enrolled or insured during the current calendar year by the carrier equals or exceeds: (A) in the case of a carrier that administers any self-funded health benefits arrangement in California, 10 percent of the total number of eligible employees, or eligible employees and dependents, respectively, enrolled or insured in California by that carrier as of December 31 of the preceding year, or (B) in the case of a carrier that does not administer any self-funded health benefit arrangements in California, 8 percent of the total number of eligible employees, or eligible employees and dependents, respectively, enrolled or insured by the carrier in California as of December 31 of the preceding year. (2) Certification shall be deemed approved if not disapproved within 45 days after submission to the commissioner. If that certification is approved, the small employer carrier shall not offer coverage to any small employers under any health benefit plans during the remainder of the current year. If the certification is not approved, the carrier shall continue to issue coverage as required by subdivision (d) and be subject to administrative penalties as established in Section 10718. (Amended by Stats. 2010, Ch. 661, Sec. 10. (SB 1163) Effective January 1, 2011.)
  152. 10705.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Certain associations may buy small employer health coverage, and carriers must give affected associations notice of these rights.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10705.1. (a) Between July 26, 1993, and October 24, 1993, as well as 60 days prior to the expiration of an existing contract that expires prior to July 1, 1994, or, for contracts expiring after July 1, 1994, 60 days prior to July 1, 1994, an association that meets the definition of guaranteed association, as set forth in Section 10700, except for the requirement that 1,000 persons be covered, shall be entitled to purchase small employer health coverage as if the association were a guaranteed association, except that the coverage shall be guaranteed only for those members of an association, as defined in Section 10700, (1) who were receiving coverage or had successfully applied for coverage through the association as of June 30, 1993, (2) who were receiving coverage through the association as of December 31, 1992, and whose coverage lapsed at any time thereafter because the employment through which coverage was received ended or an employer’s contribution to health coverage ended, or (3) who were covered at any time between June 30, 1993, and July 1, 1994, under a contract that was in force on June 30 1993. (b) An association obtaining health coverage for its members pursuant to this section shall otherwise be afforded all the rights of a guaranteed association under this chapter including, but not limited to, guaranteed renewability of coverage. (c) No later than August 25, 1993, carriers that, at any time during the 1993 calendar year have provided coverage to associations that would be eligible for coverage under this section shall notify those associations of their rights under this section. Ninety days prior to the expiration of a contract that expires prior to July 1, 1994, or, for contracts expiring after July 1, 1994, 90 days prior to July 1, 1994, carriers that have in force coverage with an association that would be eligible for coverage under this section shall notify the association of its rights under this section. (Amended by Stats. 1993, Ch. 1146, Sec. 5.7. Effective October 11, 1993.)
  153. 10706.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Carriers must file their participation and employer contribution requirements with the commissioner, apply participation rules uniformly to small employer groups, and not vary employer contribution requirements by employer size.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10706. Every carrier shall file with the commissioner the reasonable participation requirements and employer contribution requirements that are to be included in its health benefit plans. Participation requirements shall be applied uniformly among all small employer groups, except that a carrier may vary application of minimum employer participation requirements by the size of the small employer group and whether the employer contributes 100 percent of the eligible employee’s premium. Employer contribution requirements shall not vary by employer size. A carrier shall not establish a participation requirement that (1) requires a person who meets the definition of a dependent in subdivision (e) of Section 10700 to enroll as a dependent if he or she is otherwise eligible for coverage and wishes to enroll as an eligible employee and (2) allows a carrier to reject an otherwise eligible small employer because of the number of persons that waive coverage due to coverage through another employer. Members of an association eligible for health coverage eligible under subdivision (z) of Section 10700 but not electing any health coverage through the association shall not be counted as eligible employees for purposes of determining whether the guaranteed association meets a carrier’s reasonable participation standards. (Amended by Stats. 1997, Ch. 336, Sec. 22. Effective August 21, 1997.)
  154. 10706.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    A carrier must tell a small employer the actual rates within 30 days after a completed application is submitted, and the employer has 30 days to decide whether to buy coverage at those quoted rates.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10706.5. (a) After a small employer submits a completed application, the carrier shall, within 30 days notify the employer of the employer’s actual rates in accordance with Section 10714. The employer shall have 30 days in which to exercise the right to buy coverage at the quoted rates. (b) When a small employer submits a premium payment, based on the quoted rates, and that payment is delivered or postmarked, whichever occurs earlier, within the first 15 days of a month, coverage shall become effective no later than the first day of the following month. When that payment is neither delivered nor postmarked until after the 15th day of a month, coverage shall become effective no later than the first day of the second month following delivery or postmark of the payment. (c) During the first 30 days of coverage, the small employer shall have the option of changing coverage to a different benefit plan design offered by the same carrier. If a small employer notifies the carrier of the change within the first 15 days of a month, coverage under the new benefit plan design shall become effective no later than the first day of the following month. If a small employer notifies the carrier of the change after the 15th day of a month, coverage under the new benefit plan design shall become effective no later than the first day of the second month following notification. (d) All eligible employees and dependents listed on the small employer’s completed application shall be covered on the effective date of the health benefit plan. (Amended by Stats. 1993, Ch. 1146, Sec. 6.5. Effective October 11, 1993.)
  155. 10707.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    A carrier and a health benefit plan generally cannot deny or limit coverage for eligible employees or dependents based on health condition or type of illness, treatment, medical condition, or accident, subject to stated exceptions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10707. Except in the case of a late enrollee, or for satisfaction of a preexisting condition clause in the case of initial coverage of an eligible employee, a carrier may not exclude any eligible employee or dependent who would otherwise be covered, on the basis of an actual or expected health condition of that employee or dependent. No health benefit plan may limit or exclude coverage for a specific eligible employee or dependent by type of illness, treatment, medical condition, or accident, except for preexisting conditions as permitted by Section 10708. (Amended by Stats. 1995, Ch. 668, Sec. 5. Effective January 1, 1996.)
  156. 10708.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Health benefit plans cannot use preexisting condition exclusions beyond six months, and some plans cannot use them at all for children under 19 or pregnancy/maternity-related conditions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10708. (a) (1) Preexisting condition provisions of health benefit plans shall not exclude coverage for a period beyond six months following the individual’s effective date of coverage and may only relate to conditions for which medical advice, diagnosis, care, or treatment, including the use of prescription medications, was recommended by or received from a licensed health practitioner during the six months immediately preceding the effective date of coverage. (2) Notwithstanding paragraph (1), a health benefit plan offered to a small employer shall not impose any preexisting condition provision upon any child under 19 years of age. (b) A carrier that does not utilize a preexisting condition provision may impose a waiting or affiliation period, not to exceed 60 days, before the coverage issued subject to this chapter shall become effective. During the waiting or affiliation period, the carrier is not required to provide health care benefits and no premiums shall be charged to the subscriber or enrollee. (c) In determining whether a preexisting condition provision or a waiting period applies to any person, a plan shall credit the time the person was covered under creditable coverage, provided the person becomes eligible for coverage under the succeeding plan contract within 62 days of termination of prior coverage, exclusive of any waiting or affiliation period, and applies for coverage with the succeeding health benefit plan contract within the applicable enrollment period. A plan shall also credit any time an eligible employee must wait before enrolling in the health benefit plan, including any postenrollment or employer-imposed waiting or affiliation period. However, if a person’s employment has ended, the availability of health coverage offered through employment or sponsored by an employer has terminated, or an employer’s contribution toward health coverage has terminated, a plan shall credit the time the person was covered under creditable coverage if the person becomes eligible for health coverage offered through employment or sponsored by an employer within 180 days, exclusive of any waiting or affiliation period, and applies for coverage under the succeeding health benefit plan within the applicable enrollment period. (d) Group health benefit plans may not impose a preexisting conditions exclusion to a condition relating to benefits for pregnancy or maternity care. (e) A carrier providing aggregate or specific stop loss coverage or any other assumption of risk with reference to a health benefit plan shall provide that the plan meets all requirements of this section concerning preexisting condition provisions and waiting or affiliation periods. (f) In addition to the preexisting condition exclusions authorized by subdivision (a) and the waiting or affiliation period authorized by subdivision (b), carriers providing coverage to a guaranteed association may impose on employers or individuals purchasing coverage who would not be eligible for guaranteed coverage if they were not purchasing through the association a waiting or affiliation period, not to exceed 60 days, before the coverage issued subject to this chapter shall become effective. During the waiting or affiliation period, the carrier is not required to provide health care benefits and no premiums shall be charged to the insured. (Amended by Stats. 2010, Ch. 656, Sec. 5. (AB 2244) Effective January 1, 2011.)
  157. 10709.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Health benefit plans may not exclude late enrollees from coverage for more than 12 months, and premiums cannot be charged until that exclusion period ends.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10709. (a) No health benefit plan may exclude late enrollees from coverage for more than 12 months from the date of the late enrollee’s application for coverage. No premiums shall be charged to the late enrollee until the exclusion period has ended. (b) A carrier providing aggregate or specific stop loss coverage or any other assumption of risk with reference to a health benefit plan shall provide that the plan meets all requirements of this section concerning late enrollees. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  158. 1071.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. )

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    The commissioner must publish an insurer’s withdrawal application daily for one week in two general-circulation newspapers, one in San Francisco and one in Sacramento. The insurer must pay the publication expense in advance.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. ) ## 1071. The commissioner shall publish such application for withdrawal, daily, for one week, in each of two daily newspapers of general circulation, one published in the city of San Francisco, and the other in the city of Sacramento. The expense of such publication shall be paid in advance by the insurer. (Enacted by Stats. 1935, Ch. 145.)
  159. 1071.5.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. )

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    An insurer withdrawing from this state must first pay its liabilities to state residents; for resident policies, it must usually arrange reinsurance and assumption by another admitted insurer, unless it can cancel the policies under their terms.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. ) ## 1071.5. Every insurer which withdraws as an insurer, or is required to withdraw as an insurer, from this State shall, prior to such withdrawal, discharge its liabilities to residents of this State. In the case of its policies insuring residents of this State it shall cause the primary liabilities under such policies to be reinsured and assumed by another admitted insurer. In the case of such policies as are subject to cancellation by the insurer, it may cancel such policies pursuant to the terms thereof in lieu of such reinsurance and assumption. (Added by Stats. 1945, Ch. 1041.)
  160. 10711.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Carriers are not required to offer or accept small-employer coverage in several out-of-area or capacity-limited situations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10711. No carrier shall be required by the provisions of this chapter: (a) To offer coverage to, or accept applications from, a small employer as defined in paragraph (1) of subdivision (w) of Section 10700, where the small employer is not physically located in a carrier’s approved service areas. (b) To offer coverage to or accept applications from a small employer as defined in paragraph (2) of subdivision (w) of Section 10700 where the small employer is seeking coverage for eligible employees who do not work or reside in a carrier’s approved service areas. (c) To include in a health benefits plan an otherwise eligible employee or dependent, when the eligible employee or dependent does not work or reside within a carrier’s approved service area, except as provided in Section 10702.1. (d) To offer coverage to, or accept applications from, a small employer for a benefits plan design within an area if the commissioner has found that the carrier will not have the capacity within the area in its network of providers to deliver service adequately to the eligible employees and dependents of that employee because of its obligations to existing group contractholders and enrollees and that the action is not unreasonable or clearly inconsistent with the intent of this chapter. A carrier that cannot offer coverage to small employers in a specific service area because it is lacking sufficient capacity may not offer coverage in the applicable area to new employer groups with more than 50 eligible employees until the carrier notifies the commissioner that it has regained capacity to deliver services to small employers, and certifies to the commissioner that from the date of the notice it will enroll all small groups requesting coverage from the carrier until the carrier has met the requirements of subdivision (h) of Section 10705. (e) To offer coverage to a small employer, or an eligible employee as defined in paragraph (2) of subdivision (g) of Section 10700, who within 12 months of application for coverage terminated from a health benefit plan offered by the carrier. (Amended by Stats. 1996, Ch. 1062, Sec. 24. Effective January 1, 1997.)
  161. 10712.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    A carrier may be restricted from offering certain health coverage or accepting applications if the commissioner finds the carrier would be financially impaired.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10712. (a) A carrier shall not be required to offer coverage or accept applications for benefit plan designs pursuant to this chapter where the commissioner determines that the acceptance of an application or applications would place the carrier in a financially impaired condition. (b) The commissioner’s determination shall follow an evaluation that includes a certification by the commissioner that the acceptance of an application or applications would place the carrier in a financially impaired condition. (c) A carrier that has not offered coverage or accepted applications pursuant to this chapter shall not offer coverage or accept applications for any individual or group health benefit plan until the commissioner has determined that the carrier has ceased to be financially impaired. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  162. 10713.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Health benefit plans for small employers must generally be renewable, subject to listed exceptions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10713. All health benefit plans written, issued, or administered by carriers on or after the effective date of this chapter, and all health benefit plans in force on or after the effective date of this chapter shall be renewable with respect to all eligible employees or dependents at the option of the policyholder, contractholder, or small employer except as follows: (a) (1) For nonpayment of the required premiums by the policyholder, contractholder, or small employer, if the policyholder, contractholder, or small employer has been duly notified and billed for the charge and at least a 30-day grace period has elapsed since the date of notification or, if longer, the period of time required for notice and any other requirements pursuant to Section 2703, 2712, or 2742 of the federal Public Health Service Act (42 U.S.C. Secs. 300gg-2, 300gg-12, and 300gg-42) and any subsequent rules or regulations has elapsed. (2) An insurer shall continue to provide coverage as required by the policyholder’s, contractholder’s, or small employer’s policy during the period described in paragraph (1). Nothing in this section shall be construed to affect or impair the policyholder’s, contractholder’s, small employer’s, or insurer’s other rights and responsibilities pursuant to the subscriber contract. (b) If the insurer demonstrates fraud or an intentional misrepresentation of material fact under the terms of the policy by the policyholder, contractholder, or small employer or, with respect to coverage of individual enrollees, the enrollees or their representative. (c) Violation of a material contract provision relating to employer contribution or group participation rates by the policyholder, contractholder, or small employer. (d) When the carrier ceases to write, issue, or administer new small employer health benefit plans in this state, provided, however, that the following conditions are satisfied: (1) Notice of the decision to cease writing, issuing, or administering new or existing small employer health benefits plans in this state is provided to the commissioner, and to either the policyholder, contractholder, or small employer at least 180 days prior to the discontinuation of the coverage. (2) Small employer health benefit plans subject to this chapter shall not be canceled for 180 days after the date of the notice required under paragraph (1). For that business of a carrier that remains in force, any carrier that ceases to write, issue, or administer new health benefit plans shall continue to be governed by this chapter. (3) Except in the case where a certification has been approved pursuant to subdivision (l) of Section 10705 or the commissioner has made a determination pursuant to subdivision (a) of Section 10712, a carrier that ceases to write, issue, or administer new health benefit plans to small employers in this state after the passage of this chapter shall be prohibited from writing, issuing, or administering new health benefit plans to small employers in this state for a period of five years from the date of notice to the commissioner. (e) When a carrier withdraws a benefit plan design from the small employer market, provided that the carrier notifies all affected policyholders, contractholders, or small employers and the commissioner at least 90 days prior to the discontinuation of those contracts, and that the carrier makes available to the small employer all small employer benefit plan designs which it markets and satisfies the requirements of paragraph (3) of subdivision (b) of Section 10714. (f) If coverage is made available through a bona fide association pursuant to subdivision (w) of Section 10700 or a guaranteed association pursuant to subdivision (y) of Section 10700, the membership of the employer or the individual, respectively, ceases, but only if that coverage is terminated under this subdivision uniformly without regard to any health status-related factor of covered individuals. (Amended by Stats. 2011, Ch. 296, Sec. 190. (AB 1023) Effective January 1, 2012.)
  163. 10714.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Carriers must price small-employer health coverage using risk-adjusted rates within stated percentage limits, and they may use composite rates only with the small employer’s consent.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10714. Premiums for benefit plan designs written, issued, or administered by carriers on or after the effective date of this act, shall be subject to the following requirements: (a) (1) The premium for new business shall be determined for an eligible employee in a particular risk category after applying a risk adjustment factor to the carrier’s standard employee risk rates. The risk adjusted employee risk rate may not be more than 120 percent or less than 80 percent of the carrier’s applicable standard employee risk rate until July 1, 1996. Effective July 1, 1996, the risk adjusted employee risk rate may not be more than 110 percent or less than 90 percent. (2) The premium charged a small employer for new business shall be equal to the sum of the risk adjusted employee risk rates. (3) The standard employee risk rates applied to a small employer for new business shall be in effect for no less than six months. (b) (1) The premium for in force business shall be determined for an eligible employee in a particular risk category after applying a risk adjustment factor to the carrier’s standard employee risk rates. The risk adjusted employee risk rates may not be more than 120 percent or less than 80 percent of the carrier’s applicable standard employee risk rate until July 1, 1996. Effective July 1, 1996, the risk adjusted employee risk rate may not be more than 110 percent or less than 90 percent. The factor effective July 1, 1996, shall apply to in force business at the earlier of either the time of renewal or July 1, 1997. The risk adjustment factor applied to a small employer may not increase by more than 10 percentage points from the risk adjustment factor applied in the prior rating period. The risk adjustment factor for a small employer may not be modified more frequently than every 12 months. (2) The premium charged a small employer for in force business shall be equal to the sum of the risk adjusted employee risk rates. The standard employee risk rates shall be in effect for no less than six months. (3) For a benefit plan design that a carrier has discontinued offering, the risk adjustment factor applied to the standard employee risk rates for the first rating period of the new benefit plan design that the small employer elects to purchase shall be no greater than the risk adjustment factor applied in the prior rating period to the discontinued benefit plan design. However, the risk adjusted employee rate may not be more than 120 percent or less than 80 percent of the carrier’s applicable standard employee risk rate until July 1, 1996. Effective July 1, 1996, the risk adjusted employee risk rate may not be more than 110 percent or less than 90 percent. The factor effective July 1, 1996, shall apply to in force business at the earlier of either the time of renewal or July 1, 1997. The risk adjustment factor for a small employer may not be modified more frequently than every 12 months. (c) (1) For any small employer, a carrier may, with the consent of the small employer, establish composite employee and dependent rates for either new business or renewal of in force business. The composite rates shall be determined as the average of the risk adjusted employee risk rates for the small employer, as determined in accordance with the requirements of subdivisions (a) and (b). The sum of the composite rates so determined shall be equal to the sum of the risk adjusted employee risk rates for the small employer. (2) The composite rates shall be used for all employees and dependents covered throughout a rating period of no less than six months, nor more than 12 months, except that a carrier may reserve the right to redetermine the composite rates if the enrollment under the health benefit plan changes by more than a specified percentage during the rating period. Any redetermination of the composite rates shall be based on the same risk adjusted employee risk rates used to determine the initial composite rates for the rating period. If a carrier reserves the right to redetermine the rates and the enrollment changes more than the specified percentage, the carrier shall redetermine the composite rates if the redetermined rates would result in a lower premium for the small employer. A carrier reserving the right to redetermine the composite rates based upon a change in enrollment shall use the same specified percentage to measure that change with respect to all small employers electing composite rates. (Amended by Stats. 1996, Ch. 50, Sec. 2. Effective May 24, 1996.)
  164. 10715.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Carriers must apply standard employee risk rates consistently for all small employers.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10715. Carriers shall apply standard employee risk rates consistently with respect to all small employers. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  165. 10716.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    When selling benefit plan designs to small employers, each carrier must make a reasonable disclosure in its solicitation and sales materials.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10716. In connection with the offering for sale of any benefit plan design to small employers: Each carrier shall make a reasonable disclosure, as part of its solicitation and sales materials, of the following: (a) The extent to which the premium rates for a specified small employer are established or adjusted in part based upon the actual or expected variation in claims costs or actual or expected variation in health conditions of the employees and dependents of the small employer. (b) The provisions concerning the carrier’s ability to change premium rates and the factors other than claim experience which affect changes in premium rates. (c) Provisions relating to the guaranteed issue of policies and contracts. (d) Provisions relating to the effect of any preexisting condition provision. (e) Provisions relating to the small employer’s right to apply for any benefit plan design written, issued, or administered by the carrier at the time of application for a new health benefit plan, or at the time of renewal of a health benefit plan. (f) The availability, upon request, of a listing of all the carrier’s benefit plan designs, including the rates for each benefit plan design. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  166. 10717.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Carriers must file specified rate-and-design information with the commissioner and cannot provide, renew, or change covered benefit plan designs until the filing and waiting or notice requirements are met.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10717. (a) No carrier shall provide or renew coverage subject to this chapter until it has done all of the following: (1) A statement has been filed with the commissioner listing all of the carrier’s benefit plan designs currently in force that are offered or proposed to be offered for sale in this state, identified by form number, and, if previously approved by the commissioner, the date approved by the commissioner as well as the standard employee risk rate for each risk category for each benefit plan design and the highest and lowest risk adjustment factors that the carrier intends to use in determining rates for each benefit plan design. When filing a new benefit plan design pursuant to Section 10705, carriers may submit both the policy form and the standard employee risk rates for each risk category at the same time. (2) Either: (A) Thirty days expires after that statement is filed without written notice from the commissioner specifying the reasons for his or her opinion that the carrier’s risk categories or risk adjustment factors do no comply with the requirements of this chapter. (B) Prior to that time the commissioner gives the carrier written notice that the carrier’s risk categories and risk adjustment factors as filed comply with the requirements of this chapter. (b) No carrier shall issue, deliver, renew, or revise a benefit plan design lawfully provided pursuant to subdivision (a), and no carrier shall change the risk categories, risk adjustment factors, or standard employee risk rates for any benefit plan design until all of the following requirements are met: (1) The carrier files with the commissioner a statement of the specific changes which the carrier proposes in the risk categories, risk adjustment factors, or standard employee risk rates. (2) Either: (A) Thirty days expires after such statement is filed without written notice from the commissioner specifying the reasons for his or her opinion that the carrier’s risk categories or risk adjustment factors do not comply with the requirements of this chapter. (B) Prior to that time the commissioner gives the carrier written notice that the carrier’s risk categories and risk adjustment factors as filed comply with the requirements of this chapter. (c) Notwithstanding any provision to the contrary, when a carrier is changing the standard employee risk rates of a benefit plan design lawfully provided under (a) or (b) above but is not changing the risk categories or risk adjustment factors which have been previously authorized, the carrier need not comply with the requirements of paragraph (2) of subdivision (b), but instead shall submit the revised standard employee risk rates for the benefit plan design prior to offering or renewing the benefit plan design. (d) When submitting filings under subdivision (a), (b), or (c), a carrier may also file with the commissioner at the time of the filings a statement of the standard employee risk rate for each risk category the carrier intends to use for each month in the 12 months subsequent to the date of the filing. Once the requirements of the applicable subdivision (a), (b), or (c), have been met, these rates shall be used by the carrier for the 12-month period unless the carrier is otherwise informed by the commissioner in his or her response to the filings submitted under subdivision (a), (b), or (c), provided that any subsequent change in the standard employee risk rates charged by the carrier which differ from those previously filed with the commissioner must be newly filed in accordance with this subdivision and provided that the carrier does not change the risk categories or risk adjustment factors for the benefit plan design. (e) If the commissioner notifies the carrier, in writing, that the carrier’s risk categories or risk adjustment factors do not comply with the requirements of this chapter, specifying the reasons for his or her opinion, it is unlawful for the carrier, at any time after the receipt of such notice, to utilize the noncomplying health benefit plan, benefit plan design, risk categories, or risk adjustment factors in conjunction with the health benefit plans or benefit plan designs for which the filing was made. (f) Each carrier shall maintain at its principal place of business copies of all information required to be filed with the commissioner pursuant to this section. (g) Each carrier shall make the information and documentation described in this section available to the commissioner upon request. (h) Nothing in this section shall be construed to permit the commissioner to establish or approve the rates charged to policyholders for health benefit plans. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  167. 10718.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    This section lets the commissioner, and sometimes a court, impose administrative penalties for violations of this chapter, with different penalty amounts depending on the actor and the type or frequency of the violation.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10718. (a) In addition to any other remedy permitted by law, the commissioner shall have the administrative authority to assess penalties against carriers, insurance producers, and other entities engaged in the business of insurance or other persons or entities for violations of this chapter. (b) Upon a showing of a violation of this chapter in any civil action, a court may also assess the penalties described in this chapter, in addition to any other remedies provided by law. (c) Any production agent or other person or entity engaged in the business of insurance, other than a carrier, that violates this chapter is liable for administrative penalties of not more than two hundred fifty dollars ($250) for the first violation. (d) Any production agent or other person or entity engaged in the business of insurance, other than a carrier, that engages in practices prohibited by this chapter a second or subsequent time, or who commits a knowing violation of this chapter, is liable for administrative penalties of not less than one thousand dollars ($1,000) and not more than two thousand five hundred dollars ($2,500) for each violation. (e) Any carrier that violates this chapter is liable for administrative penalties of not more than two thousand five hundred dollars ($2,500) for the first violation and not more than five thousand dollars ($5,000) for each subsequent violation. (f) Any carrier that violates this chapter with a frequency that indicates a general business practice or commits a knowing violation of this chapter, is liable for administrative penalties of not less than fifteen thousand dollars ($15,000) and not more than one hundred thousand dollars ($100,000) for each violation. (g) An act or omission that is inadvertent and that results in incorrect premium rates being charged to more than one policyholder shall be a single violation for the purpose of this section. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  168. 10718.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    The commissioner may start enforcement proceedings, hold hearings, issue corrective or cease-and-desist orders, and suspend a carrier’s certificate of authority in some cases.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10718.5. (a) (1) In addition to any other remedy permitted by law, whenever the commissioner shall have reason to believe that any carrier, production agent, or other person or entity engaged in the business of insurance has violated this chapter, and that a proceeding by the commissioner in respect thereto would be in the interest of the public, the commissioner may issue and serve upon that entity an order to show cause containing a statement of the charges, a statement of the entity’s potential liability under this chapter, and a notice of a public hearing thereon before the Administrative Law Bureau of the department to be held at a time and place fixed therein, which shall not be less than 30 days after the service thereof, for the purpose of determining whether the commissioner should issue an order to that entity to pay the penalty imposed by this chapter and such order or orders as shall be reasonably necessary to correct, eliminate, or remedy the alleged violations of this chapter, including, but not limited to, an order to cease and desist from the specified violations of this chapter. (2) The hearings provided by this subdivision shall be conducted in accordance with the Administrative Procedure Act, 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 therein. (b) (1) Whenever it appears to the commissioner that irreparable loss and injury has occurred or may occur to an insured, employer, employee, or other member of the public because a carrier, production agent, or other person or entity engaged in the business of insurance has violated this chapter, the commissioner may, before hearing, but after notice and opportunity to submit relevant information, issue and cause to be served upon the entity such order or orders as shall be reasonably necessary to correct, eliminate, or remedy the alleged violations of this chapter, including, but not limited to, an order requiring the entity to forthwith cease and desist from engaging further in the violations which are causing or may cause such irreparable injury. (2) At the same time an order is served pursuant to paragraph (1) of this subdivision, the commissioner shall issue and also serve upon the person a notice of public hearing before the Administrative Law Bureau of the department to be held at a time and place fixed therein, which shall not be less than 30 days after the service thereof. (3) The hearings provided by this subdivision shall be conducted in accordance with the Administrative Procedure Act, 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 therein. (4) At any time prior to the commencement of a hearing as provided in this subdivision, the entity against which the commissioner has served an order may waive the hearing and have judicial review of the order by means of any remedy afforded by law without first exhausting administrative remedies or procedures. (c) If, after hearing as provided by subdivision (a) or (b), the charges, or any of them, that an entity has violated this chapter are found to be justified, the commissioner shall issue and cause to be served upon that entity an order requiring that entity to pay the penalty imposed by this chapter and such order or orders as shall be reasonably necessary to correct, eliminate, or remedy the alleged violations of this chapter, including, but not limited to, an order to cease and desist from the specified violations of this chapter. (d) In addition to any other penalty provided by law or the availability of any administrative procedure, if a carrier, after notice and hearing, is found to have violated this chapter knowingly or as a general business practice the commissioner may suspend the carrier’s certificate of authority to transact disability insurance. The order of suspension shall prescribe the period of such suspension. The proceedings shall be conducted in accordance with the Administrative Procedure Act, 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 therein. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  169. 10718.55.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Carriers may contract with qualified associations, but must set uniform service definitions, give all contracted qualified associations the same discounts, apply those discounts properly, and report discount schedules. They may not use discounts to reduce premiums because of members’ health status.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10718.55. (a) Carriers may enter into contractual agreements with qualified associations, as defined in subdivision (b), under which these qualified associations may assume responsibility for performing specific administrative services, as defined in this section, for qualified association members. Carriers that enter into agreements with qualified associations for assumption of administrative services shall establish uniform definitions for the administrative services that may be provided by a qualified association or its third-party administrator. The carrier shall permit all qualified associations to assume one or more of these functions when the carrier determines the qualified association demonstrates that it has the administrative capacity to assume these functions. For the purposes of this section, administrative services provided by qualified associations or their third-party administrators shall be services pertaining to eligibility determination, enrollment, premium collection, sales, or claims administration on a per-claim basis that would otherwise be provided directly by the carrier or through a third-party administrator on a commission basis or an agent or solicitor workforce on a commission basis. Each carrier that enters into an agreement with any qualified association for the provision of administrative services shall offer all qualified associations with which it contracts the same premium discounts for performing those services the carrier has permitted the qualified association or its third-party administrator to assume. The carrier shall apply these uniform discounts to the carrier’s risk adjusted employee risk rates after the carrier has determined the qualified association’s risk adjusted employee risk rates pursuant to Section 10714. The carrier shall report to the department its schedule of discounts for each administrative service. In no instance may a carrier provide discounts to qualified associations that are in any way intended to, or materially result in, a reduction in premium charges to the qualified association due to the health status of the membership of the qualified association. In addition to any other remedies available to the commissioner to enforce this chapter, the commissioner may declare a contract between a carrier and a qualified association for administrative services pursuant to this section null and void if the commissioner determines any discounts provided to the qualified association are intended to, or materially result in, a reduction in premium charges to the qualified association due to the health status of the membership of the qualified association. (b) For the purposes of this section, a qualified association is a nonprofit corporation comprised of a group of individuals or employers who associate based solely on participation in a specified profession or industry, that conforms to all of the following requirements: (1) It accepts for membership any individual or small employer meeting its membership criteria. (2) It does not condition membership, directly or indirectly, on the health or claims history of any person. (3) It uses membership dues solely for and in consideration of the membership and membership benefits, except that the amount of the dues shall not depend on whether the member applies for or purchases insurance offered by the association. (4) It is organized and maintained in good faith for purposes unrelated to insurance. (5) It existed on January 1, 1972, and has been in continuous existence since that date. (6) It has a constitution and bylaws or other analogous governing documents that provide for election of the governing board of the association by its members. (7) It offered, marketed, or sold health coverage to its members for 20 continuous years prior to January 1, 1993. (8) It agrees to offer any plan contract only to association members. (9) It agrees to include any member choosing to enroll in the plan contract offered by the association, provided that the member agrees to make required premium payments. (10) It complies with all provisions of this article. (11) It had at least 10,000 enrollees covered by association-sponsored plans immediately prior to enactment of Chapter 1128 of the Statutes of 1992. (12) It applies any administrative cost at an equal rate to all members purchasing coverage through the qualified association. (c) A qualified association shall comply with the requirements set forth in Section 10198.9. (Amended by Stats. 2002, Ch. 227, Sec. 2. Effective January 1, 2003.)
  170. 10718.7.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    This section says Chapter 8 does not limit other Insurance Code provisions unless there is a conflict with this chapter’s requirements.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 2. Small Employer Carrier Requirements [10702 - 10718.7] ( Article 2 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10718.7. Notwithstanding any other provision of law, no provision of this chapter shall be construed to limit the applicability of any other provision of the Insurance Code unless such provision is in conflict with the requirements of this chapter. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  171. 10719.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    The California Small Group Reinsurance Fund may be created to let carriers share the cost of covering high-risk small employer groups.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10719. The California Small Group Reinsurance Fund is hereby authorized to be created solely to allow carriers to share in financing the cost of covering high risk small employer groups. It shall be organized as a nonprofit corporation, which consists of all small employer carriers and small employer health care service plans which elect to participate in the fund pursuant to subdivision (d) of Section 10720. These carriers may cede that portion of risk to the fund that the fund has agreed to accept. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  172. 10719.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

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    Anyone or any entity subject to this chapter must follow the standards in Chapter 7 of the Family Code and Section 14124.94 of the Welfare and Institutions Code.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10719.1. Any person or entity subject to the requirements of this chapter shall comply with the standards set forth in Chapter 7 (commencing with Section 3750) of Part 1 of Division 9 of the Family Code and Section 14124.94 of the Welfare and Institutions Code. (Amended by Stats. 1996, Ch. 1062, Sec. 25. Effective January 1, 1997.)
  173. 1072.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. )

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    The commissioner must examine the insurer’s books and records and, if certain liability and policy conditions are met, cancel the insurer’s authority certificate and allow withdrawal. The commissioner may waive the requirements if the insurer is solvent.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. ) ## 1072. The commissioner shall make, or cause to be made by the insurance authority of the State where the insurer is organized, an examination of the books and records of the insurer. If, upon such examination, he finds that the insurer has no outstanding liabilities to residents of this State and no policies in favor of the residents of this State uncanceled or the primary liabilities under which have not been reinsured and assumed by another admitted insurer, as required by Section 1071.5, he shall cancel the insurer’s certificates of authority, if unexpired, and he shall permit the insurer to withdraw. The commissioner may, in his discretion, waive any or all of the above requirements if, after such examination, he finds it to be in a solvent condition. The cost and expense of all such examinations shall be paid as prescribed in Section 736. (Amended by Stats. 1947, Ch. 1008.)
  174. 10720.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    This section sets up how the fund is governed and requires the board and carriers/plans to make several elections and filings on specific deadlines.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10720. (a) The fund shall be governed by a board of directors, which shall initially be elected by small employer carriers and small employer health care service plans. The initial board shall be elected by a weighted vote based on net health insurance premiums derived from the state in the previous calendar year in the small employer market. The initial board shall consist of at least five and not more than nine representatives of small employer carriers and small employer health care service plans. (b) Within 180 days of the election of the initial board, the board shall adopt a plan of operation which provides for the reasonable and equitable administration of the fund. (c) The plan of operation shall, among other things, do all of the following: (1) Establish procedures to assure the fair, reasonable, and equitable administration of the fund and provide for the sharing of fund gains or losses on an equitable and proportionate basis. (2) Establish procedures for handling and accounting of program assets and moneys. (3) Establish terms of office and procedures for filling vacancies on the board. (4) Establish procedures for reinsuring risks in accordance with the provisions of this chapter. (5) Establish procedures for collecting assessments from members to provide for claims reinsured by the fund and for administrative expenses incurred or estimated to be incurred during the period for which the assessment is made. (d) Within 60 days of the board’s adoption of the plan of operation, small employer carriers and small employer health care service plans shall elect to be either a participant or nonparticipant of the fund. All participants of the fund shall be members of the fund, and only members of the fund shall continue to be members of the board. Members may elect new members of the board, if necessary, to replace initial board members who elect to be nonparticipants of the fund, subject to subdivision (a). The election shall be binding for a three-year period. Thereafter, each small employer carrier shall notify the board 90 days prior to the end of the election period whether or not they will be a member of the fund. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  175. 10720.1.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The fund has broad powers to contract, sue and be sued, issue reinsurance policies, make rules, assess members, appoint committees, and borrow money, but it may not issue health benefit plans directly to groups or individuals.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10720.1. The fund shall have the general powers and authority granted under the laws of California to insurance companies and health care service plans licensed to transact business, except the power to issue health benefit plans directly to either groups or individuals. In addition, thereto, the fund shall have the specific authority to: (a) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this chapter, including the authority to enter into contracts with similar programs of other states for the joint performance of common functions or with persons or other organizations for the performance of administrative functions. (b) Sue or be sued, including taking any legal actions necessary or proper for recovering any assessments and penalties for, on behalf of, or against the fund. (c) Take any legal action necessary to avoid the payment of improper claims against the fund. (d) Issue reinsurance policies, in accordance with the requirements of this chapter. (e) Establish rules, conditions, and procedures pertaining to the reinsurance of members’ risk by the fund. (f) Establish actuarial functions as appropriate for the operation of the fund. (g) Assess members of the fund and take advance interim assessments as may be reasonable and necessary for organizational and interim operating expenses. Any interim assessments shall be credited as offsets against any regular assessments due following the close of the fiscal year. (h) Appoint from among fund members appropriate legal, actuarial, and other committees as necessary to provide technical assistance in the operation of the fund, policy and contract design, and any other function within the authority of the fund. (i) Borrow money to effect the purposes of the fund. Any notes or other evidence of indebtedness of the fund not in default shall be legal investments for fund members and may be carried as admitted assets. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  176. 10721.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The fund must finance its reinsurance and operating costs by charging members a reinsurance contribution and, when needed, making assessments and collections from members based on their participation in the program.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10721. The fund shall provide for the financing of its reinsurance and operating costs, including actuarially sound reserves for unpaid losses, by charging members a reinsurance contribution and, as necessary, making assessments and collections from members in proportion to their participation in the program. Neither the state or any officer, agent, or employee shall be liable for any costs of the fund, or for any debts or liabilities incurred by the fund. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  177. 10722.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    If assessments are more than the fund’s actual losses and administrative expenses, the excess must be held at interest and used to cover future losses or reduce fund premiums.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10722. If assessments exceed actual losses and administrative expenses of the fund, the excess shall be held at interest and used by the fund to offset future losses or to reduce fund premiums. As used in this paragraph, “future losses” includes reserves for incurred but not reported claims. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  178. 10723.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    If a fund member becomes insolvent, the fund must take over the unpaid liability or assessment and spread it among the remaining members.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10723. Any unsatisfied net liability or outstanding assessment owed by an insolvent member participating in the fund shall be assumed by and apportioned among the remaining members in the fund in the same manner in which assessments are levied by the fund. The fund shall have all rights allowed by law on behalf of the remaining members against the insolvent member for sums due the fund. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  179. 10724.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    Carriers that choose to participate must comply with all participation requirements established by the fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10724. Carriers choosing to participate shall comply with all requirements for participation established by the fund. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  180. 10725.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The fund’s board of directors must establish the rules, conditions, and procedures for reinsurance of members’ risks by the fund.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10725. The fund’s board of directors shall establish the rules, conditions, and procedures pertaining to the reinsurance of members’ risks by the fund. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  181. 10726.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    Members participating in the fund still must comply with the specified underwriting and rating provisions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10726. Nothing in this article relieves members of participating in the fund from complying with the underwriting and rating provisions included in Article 1 (commencing with Section 10700) and Article 2 (commencing with Section 10702) in the case of small employer carriers, or in Article 3.1 (commencing with Section 1357) and with Article 3.14 (commencing with Section 1357.50) of the Health and Safety Code, in the case of small employer health care service plans. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  182. 10727.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The fund is exempt from all taxes.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10727. The fund shall be exempt from any and all taxes. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  183. 10728.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    For agreements under this article, the fund and its officers, directors, agents, and employees are not liable for damages beyond actual damages.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10728. For purposes of agreements entered into pursuant to this article, the fund, and its officers, directors, agents, and employees shall have no liability for any damages other than actual damages. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  184. 10729.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The fund must set rules for indemnifying certain people connected with the fund, but those rules cannot allow more indemnification than Section 317 of the Corporations Code permits.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 3. Voluntary Reinsurance Mechanism [10719 - 10729] ( Article 3 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10729. The fund shall establish rules, conditions, and procedures relating to the indemnification of any person or member of the fund made a party to any claim, action, suit, or proceeding because the person or member served on the board of directors of the fund, or on a committee, or was an officer or employee of the fund, provided, such rules, conditions, and procedures do not authorize indemnification in excess of that expressly permitted by Section 317 of the Corporations Code. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  185. 1073.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    If an insurer withdraws from business in the state, or if the commissioner revokes or cancels its certificate of authority, the commissioner must publish notice in specified newspapers, and the insurer must pay the publication expense.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. ) ## 1073. Whenever any insurer withdraws from business in this State, and whenever for any reason the commissioner revokes or cancels the certificate of authority admitting any insurer, the commissioner shall thereafter cause a notice of the revocation, cancellation or withdrawal to be published in one daily newspaper published in the city of San Francisco and one daily newspaper published in the city of Los Angeles. The expense of such publication shall be paid by the insurer. (Enacted by Stats. 1935, Ch. 145.)
  186. 10730.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The Board must administer the purchasing program, and covered board members or related decisionmakers cannot influence decisions with a foreseeable material financial effect or hold certain insurance-industry roles.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10730. (a) The Voluntary Alliance Uniting Employers Purchasing Program is hereby created and shall be administered by the Major Risk Medical Insurance Board. (b) No member of the Major Risk Medical Insurance Board and no decisionmaker for any nonprofit entity that assumes administrative and fiscal responsibility for operation of the program pursuant to Sections 10748.5 and 10748.6 shall make, participate in making, or in any way attempt to use his or her official position to influence the making of any decision that he or she knows or has reason to know will have a reasonably foreseeable material financial effect, distinguishable from its effect on the public generally, on him or her or a member of his or her immediate family, or on any of the following: (1) Any source of income, other than gifts and other than loans by a commercial lending institution in the regular course of business on terms available to the public without regard to official status aggregating two hundred fifty dollars ($250) or more in value provided to, received by, or promised to the member of the Major Risk Medical Insurance Board or decisionmaker for a nonprofit entity that assumes administrative and fiscal responsibility for operation of the program pursuant to Sections 10748.5 and 10748.6 within 12 months prior to the time when the decision is made. (2) Any business entity in which the member of the Major Risk Medical Insurance Board or decisionmaker for a nonprofit entity that assumes administrative and fiscal responsibility for operation of the program pursuant to Sections 10748.5 and 10748.6 is a director, officer, partner, trustee, employee, or holds any position of management. (c) Commencing January 1, 1994, no member of the Major Risk Medical Insurance Board and no decisionmaker for any nonprofit entity that assumes administrative and fiscal responsibility for the program pursuant to Sections 10748.5 and 10748.6, may be an employee, a consultant or a member of the board of directors of any insurer, hospital service plan or health care service plan, or an insurance broker or agent doing business in California. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  187. 10731.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The board may run the program and take listed administrative actions, including contracting, hiring staff, setting participation rules, and issuing regulations.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10731. The board may do any of the following: (a) Enter into contracts with carriers to provide health benefits coverage to eligible employees and their dependents. Any contract entered into pursuant to this part shall be exempt from any provision of law relating to competitive bidding, and shall be exempt from the review or approval of any division of the Department of General Services. The board shall not be required to specify the amounts encumbered for each contract, but may allocate funds to each contract based on projected and actual subscriber enrollments. (b) Enter into other contracts as are necessary or proper to carry out the provisions of this part. (c) Employ necessary staff. (d) Sue or be sued, including taking any legal actions necessary or proper for recovering any penalties for, on behalf of, or against, the program or any board member. (e) Define the health benefits coverage which the program will contract to purchase from participating carriers. (f) Appoint committees, as necessary, to provide technical assistance in the operation of the program. (g) Assess participating employers a reasonable fee for necessary costs in connection with the program. (h) Undertake activities necessary to administer the program, including marketing and publicizing the program, and assuring carrier, employer, and enrollee compliance with program requirements. (i) Establish rules, conditions, and procedures for participation for small employers. (j) Establish rules, conditions, and procedures for participation for participating carriers. (k) Establish a financial relationship directly with agents or brokers to provide services pursuant to this program. (l) Approve the benefit plan designs sold by carriers participating in the pool. (m) Issue rules and regulations as necessary to administer the program. Any rules and regulations issued pursuant to this subdivision may be adopted as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). Until December 31, 1994, the adoption of these regulations shall be deemed an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare. (n) Exercise all powers reasonably necessary to carry out the powers and responsibilities expressly granted or imposed by this part. (o) From money appropriated to the Major Risk Medical Insurance Fund, the Major Risk Medical Insurance Board may loan funds for operating expenses to establish the program. These funds shall be repaid to the Major Risk Medical Insurance Fund prior to transitioning administrative and financial responsibility for the program to a qualified nonprofit entity pursuant to Sections 10748.5 and 10748.6. (Amended by Stats. 1993, Ch. 1146, Sec. 9.7. Effective October 11, 1993.)
  188. 10731.2.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    People or entities covered by this chapter must follow the standards in the referenced Family Code and Welfare and Institutions Code provisions.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10731.2. Any person or entity subject to the requirements of this chapter shall comply with the standards set forth in Chapter 7 (commencing with Section 3750) of Part 1 of Division 9 of the Family Code and Section 14124.94 of the Welfare and Institutions Code. (Amended by Stats. 1996, Ch. 1062, Sec. 26. Effective January 1, 1997.)
  189. 10732.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The board must establish geographic areas for participating carriers to offer health coverage to eligible employees and dependents.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10732. The board shall establish geographic areas within which participating carriers may offer health coverage to eligible employees and dependents. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  190. 10733.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The board must contract with carriers to provide health benefits coverage, and participating carriers and health care service plans must meet specified standards and notice requirements.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10733. On or after the effective date of this chapter, the board shall enter into contracts with carriers for the purpose of providing health benefits coverage to eligible employees and dependents. Participating carriers shall have, but need not be limited to, all of the following operating characteristics satisfactory to the board: (a) Strong financial condition, including the ability to assume the risk of providing and paying for covered services. A participating carrier may utilize reinsurance, provider risk sharing, and other appropriate mechanisms to share a portion of the risk. (b) Adequate administrative management. (c) In the case of the health care service plan, the following requirements must be met: (1) on the effective date of the contract, the health care service plan must be in compliance with the minimum tangible net equity requirements of the Director of the Department of Managed Health Care as those requirements will be in effect on January 1, 1995, and must remain in compliance with these requirements throughout the duration of the contract; (2) (A) before the effective date of the contract, the health care service plan must have devised a system for identifying in a simple and clear fashion both in its own records and in the medical records of subscribers and enrollees the fact that the services provided are provided under the program; and (B) throughout the duration of the contract, the health care service plan must use that system; and (3) at least 30 days before the effective date of any contract with the board, the health care service plan must inform the Director of the Department of Managed Health Care in writing of the health care service plan’s intent to enter into the contract and must demonstrate in that letter, to the satisfaction of the Director of the Department of Managed Health Care, that it has complied with the requirements of paragraphs (1) and (2). (d) A satisfactory grievance procedure. (e) Participating carriers that contract with or employ health care providers shall have mechanisms to accomplish all of the following, in a manner satisfactory to the board, in consultation with the carrier’s licensing agency. (1) Review the quality of care covered. (2) Review the appropriateness of care covered. (3) Provide accessible health care services. (Amended by Stats. 2000, Ch. 857, Sec. 68. Effective January 1, 2001.)
  191. 10733.5.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    An employer buying coverage through the program does not lose eligibility just because it has more than 50 eligible employees, if it has no more than 100 eligible employees.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10733.5. Notwithstanding any other provision of law, an employer purchasing coverage through the program shall not be determined to be no longer eligible to participate in the program solely because the employer employs more than 50 eligible employees, provided the employer employs no more than 100 eligible employees. (Added by Stats. 1993, Ch. 1146, Sec. 10. Effective October 11, 1993.)
  192. 10734.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The board is exempt from licensure or regulation by the Department of Insurance or the Department of Managed Health Care, and participating carriers that contract with the program must be licensed and in good standing with their licensing agencies.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10734. (a) Notwithstanding any other provision of law, the board shall not be subject to licensure or regulation by the Department of Insurance or the Department of Managed Health Care, as the case may be. (b) Participating carriers that contract with the program shall be licensed and in good standing with their licensing agencies. (Amended by Stats. 2000, Ch. 857, Sec. 69. Effective January 1, 2001.)
  193. 10735.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The board must work with a broad range of carriers, publish selection criteria, and give notice of the application process. The administrator may not exclude a carrier just because it is small or serves a limited area.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10735. The board shall contract with a broad range of carriers in an area, if available, to ensure that enrollees have a choice from among a reasonable number and types of competing carriers. The board shall develop and make available objective criteria for carrier selection and provide adequate notice of the application process to permit all carriers a reasonable and fair opportunity to participate. The criteria and application process shall allow participating carriers to comply with their state and federal licensing and regulatory obligations, except as otherwise provided in this chapter. Carrier selection shall be based on the criteria developed by the board. The administrator shall not eliminate any carrier from selection solely because of the carrier’s size or limited service area. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  194. 10737.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The board must use appropriate and efficient means to notify small employers about sponsored health coverage available from the program.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10737. The board shall use appropriate and efficient means to notify small employers of the availability of sponsored health coverage from the program. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  195. 10738.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The board must make marketing materials available to small employers that accurately summarize the benefits plans and rates offered through the program.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10738. The board shall make available to small employers marketing materials that accurately summarize the benefits plans and rates that are offered by the carrier through the program. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  196. 10739.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    A participating carrier may not give a small group or enrollee marketing material about program benefits or rates in an area served by the program unless the board authorizes it.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10739. Unless authorized by the board, no participating carrier shall, in an area served by the program, directly, or through an employee, agent, or contractor, provide a small group or enrollee with any marketing material relating to benefits or rates provided under the program. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  197. 1074.

    ## 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 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. )

    Verify source ↗

    If the insurer does not pay the advertising expense within 30 days after the bill is presented, the commissioner must collect the fee from the surety or the furnished securities.

    ## Insurance Code - INS ## DIVISION 1. GENERAL RULES GOVERNING INSURANCE [100 - 1879.8] ( Division 1 enacted by Stats. 1935, Ch. 145. ) ## PART 2. THE BUSINESS OF INSURANCE [680 - 1879.8] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 1. General Regulations [680 - 1113] ( Chapter 1 enacted by Stats. 1935, Ch. 145. ) ## ARTICLE 15. Withdrawal of Insurers [1070 - 1076] ( Article 15 enacted by Stats. 1935, Ch. 145. ) ## 1074. Upon the failure of such insurer to pay the expense of such advertising within thirty days after the presentation of the bill therefor, the commissioner shall collect such fee from the surety in the bond furnished in accordance with the provisions of Article 12 of this chapter or out of securities furnished thereunder. (Enacted by Stats. 1935, Ch. 145.)
  198. 10740.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    Participating carriers may contract with agents or brokers to market and service health benefits coverage offered through the program, and any commissions under this section must be determined by the participating carrier and the agent or broker.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10740. Participating carriers may contract with agents or brokers to provide marketing and servicing of health benefits coverage offered through the program. Any commissions set and paid pursuant to this section shall be determined by the participating carrier and the agent or broker. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  199. 10741.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The board must enforce participation conditions for the small employer program, and those conditions must comply with this chapter.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10741. The board shall enforce conditions of participation in the program for small employers and enrollees which shall conform with the requirements of this chapter. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)
  200. 10742.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. )

    Verify source ↗

    The board must set up a system to collect premiums from small employers, including the enrollee’s share of the premium.

    ## Insurance Code - INS ## DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. ) ## PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549] ( Part 2 enacted by Stats. 1935, Ch. 145. ) ## CHAPTER 8. Small Employer Health Insurance [10700 - 10752.8] ( Heading of Chapter 8 renumbered from Chapter 14 (as added by Stats. 1992, Ch. 1128) by Stats. 1993, Ch. 113, Sec. 6. ) ## ARTICLE 4. Purchasing Pool for Small Employers [10730 - 10750] ( Article 4 added by Stats. 1992, Ch. 1128, Sec. 10. ) ## 10742. The board shall establish a mechanism to collect premiums from small employers, including remittance of the share of the premium paid by the enrollee. (Added by Stats. 1992, Ch. 1128, Sec. 10. Effective January 1, 1993. Operative July 1, 1993, by Sec. 15 of Ch. 1128.)

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