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<ns0:Description>
<ns0:Id>20250SB__120698AMD</ns0:Id>
<ns0:VersionNum>98</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-19</ns0:ActionDate>
</ns0:Action>
<ns0:Action>
<ns0:ActionText>AMENDED_SENATE</ns0:ActionText>
<ns0:ActionDate>2026-03-25</ns0:ActionDate>
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<ns0:LegislativeInfo>
<ns0:SessionYear>2025</ns0:SessionYear>
<ns0:SessionNum>0</ns0:SessionNum>
<ns0:MeasureType>SB</ns0:MeasureType>
<ns0:MeasureNum>1206</ns0:MeasureNum>
<ns0:MeasureState>AMD</ns0:MeasureState>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Committee on Insurance (Senators Padilla (Chair), Becker, Jones, Menjivar, Niello, Richardson, and Rubio)</ns0:AuthorText>
<ns0:Authors>
<ns0:Committee>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Committee on Insurance</ns0:Name>
<ns0:Members>Senators Padilla (Chair), Becker, Jones, Menjivar, Niello, Richardson, and Rubio</ns0:Members>
</ns0:Committee>
</ns0:Authors>
<ns0:Title> An act to amend Sections 805, 1628, 1629, 1661, 1666, 1668, 1668.5, 1670, 1676, 1686, 1712.5, 1728, 1729, 1729.2, 1736.5, 1738, 1742, 1748.5, 1807.5, 1821, 1871.7, 1872.83, 10163.2, 10168.25, 11623, 11797, 12928.7, 15027, 15028.7, 15029 of, and to amend and repeal Section 1210 of, the Insurance Code, relating to insurance. </ns0:Title>
<ns0:RelatingClause>insurance</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Insurance: omnibus.</ns0:Subject>
</ns0:GeneralSubject>
<ns0:DigestText>
<html:p>
(1)
<html:span class="EnSpace"/>
Existing law generally regulates insurance and creates the Department of Insurance, headed by the Insurance Commissioner. Existing law makes inactive the license of any licensee that is suspended by the Secretary of State and prohibits the inactive licensee from conducting any activity for which a license is required until the licensee is no longer suspended. Existing law makes a violation of this provision a crime.
</html:p>
<html:p>This bill would additionally make inactive the license of any licensee that is dissolved, forfeited, terminated, canceled, or surrendered by the Secretary of State.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Existing law regulates the types and amounts of investments that insurers may make. Existing
law establishes the California Organized Investment Network (COIN) within the department to pursue active measures to encourage insurers to make investments in California’s underserved and low- and moderate-income communities. Existing law authorizes a domestic incorporated insurer to make discretionary investments after investment of an amount equal to its required minimum paid-in capital in specified securities. Under existing law, those discretionary investments may include the purchase of, or loans upon, properties and securities, but are limited to the lesser of 5% of the insurer’s admitted assets or 50% of the excess of admitted assets over the sum of capital paid up, liabilities, and a required surplus. Existing law, until January 1, 2027, increases that limitation if the commissioner has approved the amount and terms of the investment in advance and COIN has identified the investment in an investment opportunity bulletin or otherwise deemed it to be a qualified investment.
</html:p>
<html:p>This bill would indefinitely extend the increased limitation.</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Existing law sets forth various provisions for the regulation and licensing of production agencies.
</html:p>
<html:p>This bill would specify those provisions generally apply to any applicant for a license issued by the commissioner or any licensee regulated by the commissioner, unless otherwise provided.</html:p>
<html:p>Existing law prohibits the commissioner from issuing a permanent license to an applicant unless the applicant has, within the 12-month period preceding the date of issue of the license, taken and passed the qualifying examination for that license.</html:p>
<html:p>This bill would toll that 12-month period during a review of the applicant’s background information by the commissioner for an alleged violation that would, if proven, result in the
suspension, revocation, or denial of the application, as specified. The bill would provide that background information also includes a judgment or order of restitution and a judgment or order assessing a fine or monetary penalty, excluding late fees. The bill would clarify that every licensee and applicant is required to promptly supply a complete written response to an inquiry from the commissioner relative to an application for, or the retention or renewal of, a license.</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Under existing law, if an organization licensed as certain agents desires to change, remove, or add to the natural persons who are to transact insurance under the authority of the organization’s license, the organization is required to file an application or notice, as prescribed by the commissioner, for an endorsement. Existing law makes the license of an organization licensed as certain agents inoperative upon the removal or termination of the last natural person named
under the organization’s license, as specified.
</html:p>
<html:p>This bill would apply the above-described provisions to organizations that are licensed as an accident and health or sickness agent.</html:p>
<html:p>Existing law authorizes the commissioner to issue to an eligible person a certificate of convenience, a temporary permit issued as a matter of convenience to allow the transaction of certain insurance without a permanent license. Existing law specifies certain categories of people who are eligible for an estate certificate of convenience, including, but not limited to, the executor or administrator of the estate of a deceased property broker-agent, casualty broker-agent, or life agent.</html:p>
<html:p>This bill would additionally include in the eligibility categories the executor or administrator of the estate of, the surviving spouse or heir otherwise entitled to conduct business of, and the conservator of the estate
of, a deceased accident and health or sickness agent.</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Existing law prohibits knowingly employing runners, cappers, steerers, or other persons to procure clients or patients to perform or obtain services or benefits under workers’ compensation coverage or to procure clients or patients to perform or obtain services or benefits under a contract of insurance or that will be the basis for a claim against an insured individual or their insurer. Existing law authorizes any interested persons, including an insurer, to bring a civil action in the name of the state for a violation of this provision and prescribes various rules and procedures for that action, including that the complaint remains under seal for at least 60 days from the date of service on the district attorney and commissioner.
</html:p>
<html:p>Except as provided, this bill would authorize the action to be dismissed only if the district attorney or the
commissioner, after providing written notice to the other entity, and the court give written consent to the dismissal. The bill would make these rules applicable even when the district attorney or commissioner have declined to proceed with the action. The bill would prohibit public access to specified records for as long as those records are under seal and would require the seal to remain in effect until a ruling is made on the motion and the court orders the complaint unsealed.</html:p>
<html:p>Existing law requires the commissioner to ensure that the Fraud Division within the department aggressively pursues all reported incidents of probable workers’ compensation fraud, as specified. Existing law requires specified funds to be distributed to district attorneys, as provided, for purposes of the investigation and prosecution of workers’ compensation fraud cases. Existing law requires the department to report to the Governor, the Legislature, specified legislative committees, and the
Fraud Assessment Commission on the activities of the Fraud Division and district attorneys supported by the funds. To meet that requirement, existing law requires the department to submit a biannual information request to those district attorneys who have received funding.</html:p>
<html:p>This bill would instead authorize the department to submit the biannual information request to meet that requirement.</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Existing law provides for an assigned risk plan for automobile insurance. Existing law requires the commissioner to administer and operate the plan as authorized by law and creates an advisory committee with which the commissioner is required to consult on a regular basis with respect to policy matters affecting the operation of the plan.
</html:p>
<html:p>The bill would set a term of 2 years for noninsurer members of that advisory committee, to be staggered as specified.</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
Existing law establishes the State Compensation Insurance Fund to be administered by a board of directors for the purpose of transacting workers’ compensation insurance and other public employment-related insurances. Existing law requires the board to invest and reinvest all moneys in the fund in excess of current requirements in the same manner as is authorized in certain provisions applicable to private insurance carriers.
</html:p>
<html:p>This bill would require the board of directors to provide an annual and quarterly investment report to the department, as specified.</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
Existing law, the Public Insurance Adjusters Act, governs the regulation, licensing, and registration of public insurance adjusters. Existing law prohibits a licensee from acting as a public insurance adjuster without having first entered into a written contract. Existing law
governs the form and content of the contract. Existing law requires a public adjuster who receives, accepts, or holds any funds on behalf of an insured towards the settlement of a claim to deposit the funds in a non-interest-bearing escrow or trust account, as specified, within 15 business days of receipt. Existing law makes a violation of the act a misdemeanor.
</html:p>
<html:p>This bill would require the written contract to also include the licensee’s email address and would clarify that the licensee’s listed address is a California business address. The bill would instead require a public adjuster to deposit funds within 15 calendar days of receipt or, if the funds relate to a claim for loss or damage in an area that is or was subject to a catastrophic disaster or a state of emergency or a local emergency, within 7 calendar days of receipt. The bill would require a public adjuster to remit to the insured any funds received towards the settlement of a claim within 30 calendar days
of receipt or, if the funds relate to an area that is or was subject to a catastrophic disaster or state of emergency or a local emergency, within 15 calendar days of receipt.</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
This bill would make other technical changes relating to the calculation of adjusted premiums and present values for life insurance policies issued in a particular calendar year.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
By creating new requirements for certain insurance licensees, the violation of which constitutes a crime, this bill would impose a state-mandated local program.
</html:p>
<html:p>The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that
reimbursement.</html:p>
<html:p>This bill would provide that no reimbursement is required by this act for a specified reason.</html:p>
</ns0:DigestText>
<ns0:DigestKey>
<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
<ns0:Appropriation>NO</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>YES</ns0:LocalProgram>
</ns0:DigestKey>
<ns0:MeasureIndicators>
<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
<ns0:ImmediateEffectFlags>
<ns0:Urgency>NO</ns0:Urgency>
<ns0:TaxLevy>NO</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
<ns0:Prop25TrailerBill>NO</ns0:Prop25TrailerBill>
</ns0:ImmediateEffectFlags>
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</ns0:Description>
<ns0:Bill id="bill">
<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_42246A9B-6363-48BE-8BA3-51F071A90C9D">
<ns0:Num>SECTION 1.</ns0:Num>
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Section 805 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:LawSection id="id_CE5CE81E-9136-4729-B8B6-9F043018288A">
<ns0:Num>805.</ns0:Num>
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<ns0:Content>
<html:p>The license of any licensee that is suspended, dissolved, forfeited, terminated, canceled, or surrendered by the Secretary of State shall become inactive. The inactive licensee shall not conduct any activity for which a license, issued by the commissioner, is required until the licensee is restored to active status by the Secretary of State.</html:p>
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 1210 of the
<ns0:DocName>Insurance Code</ns0:DocName>
, as amended by Section 3 of Chapter 627 of the Statutes of 2021, is
amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_0FE6725D-527C-488E-8F93-A6C1D8FFD0A6">
<ns0:Num>1210.</ns0:Num>
<ns0:LawSectionVersion id="id_EB877F29-BD36-49FE-99E4-4395EDB37B1C">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
A domestic incorporated insurer, after investing an amount equal to its required minimum paid-in capital in securities specified in Article 3 (commencing with Section 1170), may make investments as it may see fit in the purchase of, or loans upon, properties and securities other than or in addition to or in excess of those set forth in Article 2 (commencing with Section 1152), Article 3 (commencing with Section 1170), and Article 4 (commencing with Section 1190). Investments under this section shall not exceed, in the aggregate, the lesser of either of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Five percent of the insurer’s admitted assets.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Fifty percent of the excess of admitted assets over the sum of capital paid
up, liabilities, and the surplus required by Section 700.02. The percentage or dollar value of admitted assets and capital paid up and liabilities shall be determined by the insurer’s last preceding annual statement of conditions and affairs made as of the preceding December 31 and that has been filed with the commissioner as required by law. The investments shall be subject to the provisions of Sections 1153.5, 1154, 1200, 1201, and 1202 as if they were excess funds investments. This section applies to an insurer other than a life insurer only if the insurer has aggregate capital and surplus of at least ten million dollars ($10,000,000).
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
An investment originally made by an insurer pursuant to this section that subsequently meets the requirements of an investment contained in Article 2 (commencing with Section 1152), Article 3 (commencing with Section 1170), or Article 4 (commencing with Section 1190) may, at the election of the insurer, be
considered to be held pursuant to any provision contained in those articles.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Pursuant to the authority conferred by subdivision (a), notwithstanding Section 1100, an insurer may make discretionary investments in shares of an open-end diversified management investment company, as defined in the federal Investment Company Act of 1940, as amended. This subdivision does not prohibit any other discretionary investment, now or in the future, that might otherwise be made by an insurer, whether expressly identified in this section or not.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The limitation in subdivision (a) shall be
increased, at any time, for an insurer if both of the following apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The commissioner has approved the amount and other terms of the investment for the insurer before the insurer makes the investment.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The California Organized Investment Network (COIN) has identified the investment
in an investment opportunity bulletin, or otherwise deemed the investment to be a qualified investment, pursuant to Article 10.1 (commencing with Section 926) of Chapter 1.
</html:p>
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 1210 of the
<ns0:DocName>Insurance Code</ns0:DocName>
, as added by Section 4 of Chapter 627 of the
Statutes of 2021, is repealed.
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 1628 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:LawSection id="id_20A8C07E-9268-4F86-9280-ADC8608A7AA5">
<ns0:Num>1628.</ns0:Num>
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<ns0:Content>
<html:p>As used in this code, an “organization” means any legal entity other than a natural person. If reference is made to a natural person named on an organization license, the reference shall be to a person who is named to exercise the power and perform the duties under an organization license, pursuant to Section 1656. The natural person named on the organizational license shall meet the qualifications required for the type of license sought by the organization.</html:p>
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<ns0:BillSection id="id_1299AC03-4EF4-439E-B4BD-20C8A2F84D83">
<ns0:Num>SEC. 5.</ns0:Num>
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Section 1629 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_A6B31935-0BF9-419B-BA38-E867AD0A0A6C">
<ns0:Num>1629.</ns0:Num>
<ns0:LawSectionVersion id="id_8E7F6A75-54F1-479F-B482-3F8C991EE893">
<ns0:Content>
<html:p>“License year” as used in this code shall be determined for each entity as follows:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
Upon initial licensing, the license year starts on the date the license is issued.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Subsequently, each license year starts the first day of the month following the month in which the initial license was issued.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
A license year ends the following calendar year on the last calendar day of the month in which the initial license was
issued.
</html:p>
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</ns0:LawSection>
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<ns0:BillSection id="id_82AC94A4-1EF3-43A5-8493-726026F333C7">
<ns0:Num>SEC. 6.</ns0:Num>
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Section 1661 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:LawSection id="id_9ABBBAEA-F4BE-4F00-B11E-8A6948C1B638">
<ns0:Num>1661.</ns0:Num>
<ns0:LawSectionVersion id="id_BF32EFC8-C4C4-427C-A60F-7260F4F67886">
<ns0:Content>
<html:p>Whenever an organization licensed as a life agent, accident and health or sickness agent, property broker-agent, casualty broker-agent, personal lines broker-agent, or limited lines automobile insurance agent desires to change, remove, or add to the natural person or persons who are to transact insurance under authority of its license pursuant to Section 1656, it shall immediately file an application or notice on a form prescribed by the commissioner with the commissioner for an endorsement changing its license accordingly. The form shall be submitted by a means of electronic service approved by the commissioner. The commissioner shall require that the qualifying examination provided by this code be taken by any natural person named by the
organization to exercise its agency or brokerage powers who would be required to take and pass the qualifying examination. That natural person or persons and the organization are in all other respects subject to the provisions of this chapter and the insurance laws.</html:p>
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<ns0:BillSection id="id_AE040D01-1FD9-4D51-B6C3-6F13B3A99232">
<ns0:Num>SEC. 7.</ns0:Num>
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Section 1666 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_F92EA158-E49E-4870-A50E-8FC9C27F14C9">
<ns0:Num>1666.</ns0:Num>
<ns0:LawSectionVersion id="id_E49E0CC4-9766-4DAA-96BB-5FD2B23576FA">
<ns0:Content>
<html:p>Upon the filing of an application for any license under this code, the commissioner may make an investigation and require the filing of supplementary documents, affidavits, and statements as may be necessary to obtain a full disclosure of information as will aid the commissioner in determining whether the prerequisites for the license have been met. If the applicant makes a showing satisfactory to the commissioner that the applicant meets all prerequisites, the commissioner, if the applicant is eligible, may issue a certificate of convenience, and upon the applicant meeting any applicable examination
requirements may issue a permanent license.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_3B2A5912-F349-4E72-BF26-AA43BA9A0B57">
<ns0:Num>SEC. 8.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1668.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1668 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_7EA2A15E-28DC-4FC5-B973-DF3DA53293E0">
<ns0:Num>1668.</ns0:Num>
<ns0:LawSectionVersion id="id_7CD6BEF2-5117-4F41-84F9-765CEF7ECFA4">
<ns0:Content>
<html:p>The commissioner may deny an application for a license issued under this code if any of the following are true:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
The applicant is not properly qualified to perform the duties of a person holding the license for which the applicant applied.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The granting of the license will be against public interest.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The applicant does not intend actively and in good faith to carry on as a business with the general public the transactions that would
be permitted by the issuance of the license for which the applicant applied.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The applicant is not of good business reputation.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The applicant is lacking in integrity.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The applicant has been refused a professional, occupational, or vocational license or had a professional, occupational, or vocational license suspended or revoked by a licensing authority for reasons that should preclude the granting of the license for which the applicant applied.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
The applicant seeks the license for the purpose of avoiding or preventing the operation or enforcement of the insurance laws of this state.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
The applicant has knowingly or willfully made a misstatement in an application to the
commissioner for a license, or in a document filed in support of that application, or has made a false statement in testimony given under oath before the commissioner or another person acting in the commissioner’s stead.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The applicant has previously engaged in a fraudulent practice or act or has conducted any business in a dishonest manner.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
The applicant has shown incompetency or untrustworthiness in the conduct of any business, or has by commission of a wrongful act or practice in the course of any business exposed the public or those dealing with the applicant to the danger of loss.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
The applicant has knowingly misrepresented the terms or effect of an insurance policy or contract.
</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
The applicant has failed to perform a duty
expressly enjoined upon them by this code or has committed an act expressly forbidden by this code.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
The applicant has been convicted of any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
A felony.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A misdemeanor specified by this code or other laws regulating insurance.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
A public offense having as one of its necessary elements a fraudulent act or an act of dishonesty in acceptance, custody, or payment of money or property.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
The applicant has aided or abetted a person in an act or omission that would constitute grounds for the suspension, revocation, or refusal of a license or certificate issued under this code to the person aided or abetted.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
The applicant has permitted a person in the applicant’s employ to violate this code.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
The applicant has violated a law relating to conduct of business that could lawfully be done only under authority conferred by that license.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
The applicant has submitted to the commissioner a false or fraudulent certificate pursuant to subdivision (d) of Section 1749.5.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
The applicant has been found liable by clear and convincing evidence in a civil action involving allegations of elder or dependent abuse, oppression, fraud, malice, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty.
</html:p>
<html:p>A judgment, plea, or verdict of guilty, or a plea of nolo contendere is deemed to be a conviction within the meaning of this
section.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_1374BC65-96D8-4AB5-82B7-3F6FD991EFAE">
<ns0:Num>SEC. 9.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1668.5.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1668.5 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_7A48B709-3F5A-40CF-9E47-D6FB4101CD2A">
<ns0:Num>1668.5.</ns0:Num>
<ns0:LawSectionVersion id="id_8271A6CC-880A-43B8-B2B5-F9466F4C3647">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The commissioner may deny an application for a license issued under this code, and may suspend or revoke the permanent license of an organization licensed under this code as authorized by Section 1738, if the applicant or holder of the permanent license is an organization and a controlling person of the organization is any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The controlling person has previously engaged in a fraudulent practice or act or has conducted any business in a dishonest manner.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The controlling person has shown incompetency or untrustworthiness in the conduct of any business, or has by commission of a wrongful act or practice in the course of any business exposed the public or those dealing with the controlling person to the danger of loss.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The controlling person has knowingly misrepresented the terms or effect of an insurance policy or contract.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The controlling person has failed to perform a duty expressly enjoined upon them by a provision of this code or has committed an act expressly forbidden by a provision of this code.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The controlling person has been convicted
of any of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
A felony.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A misdemeanor specified by this code or other laws regulating insurance.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
A public offense having as one of its necessary elements a fraudulent act or an act of dishonesty in acceptance, custody, or payment of money or property.
</html:p>
<html:p>A judgment, plea, or verdict of guilty, or a plea of nolo contendere is deemed to be a conviction within the meaning of this section.</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The controlling person has aided or abetted a person in an act or omission that would constitute grounds for the suspension, revocation, or refusal of a license or certificate issued under this code to the person aided or abetted.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
The
controlling person has permitted a person in the controlling person’s employ to violate this code.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
The controlling person has violated a law relating to conduct of business that could lawfully be done only under authority conferred by a license under this code.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
The controlling person has been found liable by clear and convincing evidence in a civil action involving allegations of elder or dependent abuse, oppression, fraud, malice, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
As used in this section, “controlling person” means a person who possesses, directly or
indirectly, the power to direct or cause the direction of the management and policies of the organization, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, including, but not limited to, power that is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, more than 10 percent of the voting securities of the organization. This presumption may be rebutted by a showing that control does not exist in fact. The commissioner may, after furnishing all persons in interest notice and opportunity to be heard, determine that control exists in fact, notwithstanding the absence of a presumption to that effect.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_FD22A6A0-EBE4-4F99-A40B-EBF6A93AE3D1">
<ns0:Num>SEC. 10.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1670.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1670 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_B731F035-13DA-453A-A55B-3B6A8A8A67B9">
<ns0:Num>1670.</ns0:Num>
<ns0:LawSectionVersion id="id_2FBE391C-6244-43FF-B06F-1BC7097E1334">
<ns0:Content>
<html:p>Unless otherwise provided, an applicant for any license under this code, within one year from the date of the receipt by the commissioner of the application, whether or not the filing is complete, or within one year from the date of the issuance to the applicant of a certificate of convenience, if any,
whichever is the later date, neither fully qualifies for and receives that license on a permanent basis, nor is denied its issue, the application is automatically denied without prejudice to the filing of a new application for the license unless in a proceeding under a statement of issues the commissioner for good cause determines the denial should be set aside or stayed.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_189D1517-7D4A-4543-8218-16A415FFFE12">
<ns0:Num>SEC. 11.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1676.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1676 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_A62BDFB9-87C5-434E-8FCC-F70C21117F85">
<ns0:Num>1676.</ns0:Num>
<ns0:LawSectionVersion id="id_8F7713B1-624E-4A7C-947D-7238FDC2A059">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Except as set forth in Sections 1675 and 1679, the commissioner shall not issue a permanent license pursuant to this chapter to an applicant therefor unless the applicant has within the 12-month period next preceding the date of issue of the license taken and passed the qualifying examination for that license. The 12-month period shall be tolled during any review of the applicant’s background information by the commissioner for an alleged violation that would, if proven, result in the suspension, revocation, or denial of the application as prescribed in Section 1668. This section shall not apply to a person licensed as a property broker-agent or as a casualty broker-agent who applies for a license as a personal lines
broker-agent.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
An application for both the life and accident and health or sickness license types shall meet the requirement in subdivision (a) by passing one examination covering subjects pertaining to both license types. These applicants shall pay the fee for a life agent, as specified in paragraph (4) of subdivision (a) of Section 1751.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
An applicant for a life license pursuant to Section 1626 or a life license limited to the payment of funeral and burial expenses who is limited by the terms of a written agreement with an insurer that has filed on that life agent’s behalf a notice of appointment with the commissioner to transact only specific life insurance policies or annuities having an initial face amount of twenty thousand dollars ($20,000) or less that are designated by the purchaser for the payment of funeral and burial expenses, shall not be required to take the
full life agent examination to obtain a license. The applicant shall be required to take an examination developed to test their knowledge of topics relevant to the type of policies that they are restricted to sell.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_60C60504-AA77-44E0-8587-98DD52549866">
<ns0:Num>SEC. 12.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'8.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1686.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1686 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_005EB4C0-49B2-4FB5-8A9A-621DD61FFA47">
<ns0:Num>1686.</ns0:Num>
<ns0:LawSectionVersion id="id_1AF203B6-0DFE-4614-BE16-F84F4EF21477">
<ns0:Content>
<html:p>To be eligible for an estate certificate of convenience, a person shall be one of the following:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
The executor or administrator of the estate of a deceased property broker-agent, casualty broker-agent, life agent, or accident and health or sickness agent.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
If no executor or administrator has been appointed, the surviving spouse or heir otherwise entitled to conduct the business of the deceased property broker-agent, casualty broker-agent,
life agent, or accident and health or sickness agent.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The conservator of the estate of a property broker-agent, casualty broker-agent, life agent, or accident and health or sickness agent.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_E0410CCD-41FA-457F-9F29-5F308AA04DC0">
<ns0:Num>SEC. 13.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'10.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1712.5.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1712.5 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_D448AB92-3D8F-4B3B-B02A-4343DFC54D4D">
<ns0:Num>1712.5.</ns0:Num>
<ns0:LawSectionVersion id="id_7E4625AE-AB8C-41A5-9B34-EDF95B6CFC59">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The license of an organization licensed as a property broker-agent, casualty broker-agent, life agent, or accident and health or sickness agent shall become inoperative upon the removal or termination of the last natural person named thereon, pursuant to Section 1656.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Unless the license is reactivated by the correction of all deficiencies including, if necessary, the adding of a natural person to transact insurance under the authority of the organization’s license pursuant to Section 1661, the license shall not be
renewed.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_701CB0E9-D35A-4215-84DF-1F3A7801A4D6">
<ns0:Num>SEC. 14.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'12.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1728.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1728 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_4BEF144B-0B90-4665-80D7-F4A8FECE4A5A">
<ns0:Num>1728.</ns0:Num>
<ns0:LawSectionVersion id="id_B32EF8A8-BAA6-460D-9A3C-CC646EAE055B">
<ns0:Content>
<html:p>Every resident licensee under this code, unless otherwise provided, shall maintain a principal office in this state for the transaction of business. The address of the office shall, pursuant to Section 1658, be specified on all applications for license and renewal applications.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_922E1D56-2ABD-46F6-AC62-4C96747BF6EE">
<ns0:Num>SEC. 15.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'12.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1729.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1729 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_FEA6075C-A3E9-4CC9-BE75-059BBE225106">
<ns0:Num>1729.</ns0:Num>
<ns0:LawSectionVersion id="id_FCAC30BC-3B13-4AC7-97DC-651CE5ABAF36">
<ns0:Content>
<html:p>Every licensee and every applicant for a license shall, within 30 days of learning of a change, notify the commissioner using an electronic service approved by the commissioner of any change in that licensee or applicant’s email, residence, principal business, or mailing address as given to the commissioner pursuant to Sections 1658 and 1728.</html:p>
</ns0:Content>
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</ns0:LawSection>
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</ns0:BillSection>
<ns0:BillSection id="id_51A966B6-27A8-484C-8518-02698D2F4645">
<ns0:Num>SEC. 16.</ns0:Num>
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Section 1729.2 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_001DD63B-AD84-44D1-82F2-9AEB935C49A4">
<ns0:Num>1729.2.</ns0:Num>
<ns0:LawSectionVersion id="id_01D46F9E-F2F9-40FE-9D87-03DF3574C347">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
An applicant or licensee shall notify the commissioner when any of the background information set forth in this section changes after the application has been submitted or the license has been issued. If the licensee is listed as an endorsee on any business entity license, the licensee shall also provide this notice to any officer, director, or partner listed on that business entity license.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
A business entity licensee, upon learning of a change in background information pertaining to any unlicensed person listed on its business entity license or application therefor, shall notify the commissioner of that change. The changes subject to this requirement include changes pertaining to any unlicensed officer, director, partner, member, or controlling person,
or any other natural person named under the business entity license or in an application therefor.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The following definitions apply for the purposes of this section:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“License” includes all types of licenses issued by the commissioner pursuant to Chapter 5 (commencing with Section 1621), Chapter 5A (commencing with Section 1759), Chapter 6 (commencing with Section 1760), Chapter 6.5 (commencing with Section 1781.1), Chapter 7 (commencing with Section 1800), and Chapter 8 (commencing with Section 1831) of Part 2 of Division 1, Chapter 1 (commencing with Section 10110) of Part 2 of Division 2, Chapter 4 (commencing with Section 12280) of Part 5 of Division 2, Article 8 (commencing with Section 12418) of Chapter 1 of Part 6 of Division 2, and Chapter 1 (commencing with Section 14000) and Chapter 2 (commencing with Section 15000) of Division 5.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Background information” means any of the following: a misdemeanor or felony conviction; a filing of felony criminal charges in state or federal court; an administrative action regarding a professional or occupational license or regarding conduct or activity for which a professional or occupational license was required but not possessed; an administrative or civil action filed by, or on behalf of, a government or regulatory agency alleging any unlawful conduct, activity, or omission; a judgment or order of restitution; a judgment or order assessing a fine or monetary penalty, excluding late fees; any applicant’s or licensee’s discharge or attempt to discharge, in a personal or organizational bankruptcy proceeding, an obligation regarding any insurance
premiums or fiduciary funds owed to any person, including a premium finance company, or managing general agent; and any admission, or judicial finding or determination, of fraud, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Applicant” and “licensee” include individual and organization applicants and licensees, and officers, directors, partners, members, and controlling persons (as defined in subdivision (b) of Section 1668.5) of an organization.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Notification to the commissioner shall be in writing and shall be sent within 30 days of the date the applicant or licensee learns of the change in background information.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The commissioner may adopt regulations necessary or desirable to implement this section.
</html:p>
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</ns0:LawSection>
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</ns0:BillSection>
<ns0:BillSection id="id_ECA14388-B5D6-403F-B6AD-78B3538770E3">
<ns0:Num>SEC. 17.</ns0:Num>
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Section 1736.5 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_CF87B6BB-86CD-4757-95A5-F42EB915132C">
<ns0:Num>1736.5.</ns0:Num>
<ns0:LawSectionVersion id="id_1AC014B2-EADF-4D2F-B1B9-43A0670D6287">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Every licensee and applicant shall promptly supply a complete written response to an inquiry from the commissioner relative to an application for, or the retention or renewal of, a license, or an investigation relating to a consumer complaint or a matter relating to a producer licensing background change reporting requirement under Section 1729.2. The commissioner may revoke, suspend, or refuse to issue or renew a license if the licensee or applicant does not promptly
supply a complete response in writing to an inquiry from the commissioner.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For purposes of this section, “promptly supply” means to provide a written response to the inquiry that is received by the commissioner no later than 21 days after the date the inquiry was mailed or otherwise communicated to the applicant or licensee.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
For purposes of this section, the term “licensee” and “applicant” have the same definitions as those contained in paragraph (3) of subdivision (c) of Section 1729.2, and the licenses covered by this section are the same as those covered by paragraph (1) of subdivision (c) of Section 1729.2.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
For purposes of this section, “complete” means the response addresses all issues raised in the inquiry and includes copies of any requested documentation and records.
</html:p>
</ns0:Content>
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</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_817B29C3-F16C-4ACC-B795-8AB88E249D47">
<ns0:Num>SEC. 18.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'13.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1738.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1738 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_DDA00E9F-4B42-45CC-9DB1-B136581297A8">
<ns0:Num>1738.</ns0:Num>
<ns0:LawSectionVersion id="id_66A0B00E-F712-4D3F-AD16-A44E436F8806">
<ns0:Content>
<html:p>The commissioner may suspend or revoke any permanent license issued pursuant to this code on any of the grounds set forth in Article 6 hereof on which the commissioner may deny an application. When the word “applicant” is used in those grounds, the word shall for the application of this section be the words “the holder of a permanent license.” A suspension or revocation based upon a ground set forth in Section 1669 may be without notice or hearing. Suspension or
revocation of any permanent license, except a restricted license, on a ground other than that set forth in Section 1669 shall be after notice and hearing conducted in accordance with Chapter 5 of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner has all of the powers granted therein.</html:p>
</ns0:Content>
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</ns0:LawSection>
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</ns0:BillSection>
<ns0:BillSection id="id_A6BDE3A2-5122-4E51-B704-C2D17756DEC2">
<ns0:Num>SEC. 19.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'13.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'1742.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 1742 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_247F50A6-B080-4F66-8A1D-F1C080A0CDC1">
<ns0:Num>1742.</ns0:Num>
<ns0:LawSectionVersion id="id_2D5ADCB9-E3BF-41B1-9E69-7F255FB3B26C">
<ns0:Content>
<html:p>Where a person who is or has been licensed under this code has been found by the commissioner to have violated any provision of this code which would justify the suspension or revocation of a license held, or where a person is applying for a license under this code and there exists grounds for the denial by the commissioner of his application, the commissioner may, after hearing, revoke the license held or deny the application for an unrestricted license,
and in lieu thereof issue to such a person a restricted license. The commissioner may impose any reasonable conditions upon the acquisition of such restricted license or the conduct of the holder thereof. The holder of the restricted license has no property right therein and the commissioner may, with or without either hearing or cause, suspend or revoke a restricted license. If a hearing is held under this section, it shall be conducted in accordance with Chapter 5, Part 1, Division 3, Title 2 of the Government Code. The holder of a restricted license is subject to all the provisions of this code and such license shall be kept in force and renewed in the same manner, at the same time, and subject to the same conditions and fees as are applicable to an unrestricted license to act in the same capacity.</html:p>
</ns0:Content>
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</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_D76A2E6C-35C0-49BE-A49C-87F9F9E786AA">
<ns0:Num>SEC. 20.</ns0:Num>
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Section 1748.5 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_152936D7-D491-43CD-835F-49F6594D4D72">
<ns0:Num>1748.5.</ns0:Num>
<ns0:LawSectionVersion id="id_6B395F07-865B-4102-92C7-8A0369170498">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
For the purposes of this section, the following definitions are applicable:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Production agency” means any person or organization licensed under Chapter 5 (commencing with Section 1621), Chapter 5A (commencing with Section 1759), Chapter 6 (commencing with Section 1760), Chapter 7 (commencing with Section 1800), or Chapter 8 (commencing with Section 1831), or Chapter 2 (commencing with Section 15000) of Division 5.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Subject person” means any person who has participated or may participate in
any manner in the business of a production agency, or any person licensed as a production agency.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Insurer” means any domestic insurer, and any insurer that is admitted to transact insurance in this state, provided that if a subject person of an insurer is not a resident of California, or operating out of a place of business within California, then the subject person shall be engaged in direct management, direction, or conduct of the business of insurance in California in order to come within the provisions of this section.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
If, after notice and a hearing, the commissioner finds all of the following, the commissioner may issue an order removing a subject person from the
subject person’s office or employment with the production agency and prohibiting the subject person from participating in any manner in the conduct of the business of an insurer or production agency, except with the prior consent of the commissioner:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The subject person has engaged in misconduct with respect to the business of insurance that has caused financial or other injury to any person, or
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The subject person has engaged in fraud, or willful acts or omissions involving dishonesty that exposed a person to financial or other injury; and
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The subject person’s conduct or practice demonstrates unfitness to continue as a subject person.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
If the commissioner gives written notice pursuant to
subdivision (b) to a subject person, the commissioner shall immediately issue an order prohibiting the subject person from participating in any manner in the business of insurance, except with the prior consent of the commissioner, if the commissioner: (A) finds that failure to immediately issue the order threatens the financial solvency of an insurer or may reasonably be expected to cause irreparable injury to any person; (B) serves that subject person and the production agency with written notice of the suspension order; and (C) finds that all of the necessary factors are present which would permit the commissioner, after notice and a hearing, to issue an order pursuant to subdivision (b) removing a subject person from the subject person’s office or employment with the production agency and prohibiting the subject person from participating in any manner in the business of an insurer or production agency.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Any suspension order issued
pursuant to paragraph (1) of this subdivision shall be effective until the date the commissioner dismisses the charges contained in the notice served under subdivision (b) or paragraph (1) of this subdivision, the effective date of an order issued by the commissioner pursuant to subdivision (b), or a court issues a stay of the order pursuant to subdivision (d).
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Within 10 days after a subject person has been served with an order of suspension pursuant to subdivision (c), the person may apply to the superior court of the county in which the principal office of the production agency is located for a stay of the order pending completion of the proceedings pursuant to subdivision (b), and the court shall have jurisdiction to issue an order staying the suspension. Nothing in this subdivision shall be deemed to authorize the court to issue a stay order on an ex parte basis.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
If the commissioner finds both of the following, the commissioner shall immediately issue an order suspending a subject person from the subject person’s office or employment with a production agency and prohibiting the subject person from participating in any manner in the conduct of the business of an insurer or production agency, except with the prior consent of the commissioner: (A) the subject person has been charged in an indictment issued by a grand jury, or in an information, complaint, or similar pleading issued by a United States Attorney, district attorney, or other governmental official or agency authorized to prosecute crimes, with a crime punishable by imprisonment for a term exceeding one year and which involves as one of its necessary elements a fraudulent act or an act of dishonesty in the acceptance, custody, or payment of money or property; and (B) that a failure to immediately issue the order threatens the financial solvency of an insurer or may
cause financial or other injury to any person.
</html:p>
<html:p>In the event the criminal proceedings are terminated other than by judgment of conviction, an order issued pursuant to paragraph (1) of this subdivision shall be deemed rescinded as if it had not been issued.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If the commissioner finds both of the following, the commissioner may immediately issue an order removing a subject person from the subject person’s office or employment with a production agency and prohibiting the subject person from participating in any manner in the business of an insurer or production agency, except with the prior consent of the commissioner: (A) the person has during the preceding five years been convicted of a crime that is punishable by imprisonment for a term exceeding one year and has as one of its necessary elements a fraudulent act or an act of dishonesty in the accepting, custody, or payment of money or property; and
(B) that a failure to immediately issue the order threatens the financial solvency of an insurer or may cause financial or other injury to any person.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The fact that any subject person charged with a crime involving as one of its necessary elements a fraudulent act or any act of dishonesty in the acceptance, custody, or payment of money or property is not convicted of that crime shall not preclude the commissioner from issuing an order regarding the subject person pursuant to other provisions of this code.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Within 30 days after an order is issued pursuant to subdivision (c) or (e), the subject person to whom the order is issued may choose to do either of the following: (A) file with the commissioner an application for a hearing on the order. The commissioner shall, upon the written request of the subject person, extend the 30-day period by an
additional 30 days provided the request is filed with the commissioner within 30 days after the order is issued. If the commissioner fails to commence the hearing within 15 business days after the application is filed, or within a longer period of time to which the subject person consents, the order shall be deemed rescinded as if it had not been issued. Within 30 days after the hearing, the commissioner shall affirm, modify, or rescind the order; otherwise, the order shall be deemed rescinded as if it had not been issued, or (B) petition for judicial review of the order pursuant to Section 1085 of the Code of Civil Procedure, where the court shall exercise its independent judgment on the evidence.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The right of any subject person to whom an order is issued pursuant to subdivision (c) or (e) to petition for judicial review of the order shall not be affected by the failure of that subject person to apply to the commissioner for a hearing on
the order as provided by this subdivision.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Any person to whom an order is issued pursuant to subdivision (b), (c), or (e) may apply to the commissioner to modify or rescind the order. The commissioner shall not grant the application unless the commissioner finds that it is reasonable to believe that the person will, if and when the person becomes a subject person, comply with all of the applicable provisions of this code and of any regulation or order issued thereunder.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The right of any subject person to whom an order is issued pursuant to subdivision (b), (c), or (e) to petition for judicial review of the order shall not be affected by the failure of that subject person to apply to the commissioner pursuant to paragraph (1).
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
It is unlawful for any
subject person or former subject person to whom an order is issued pursuant to subdivision (b), (c), or (e) to do any of the following as long as the order is in effect, except with the prior consent of the commissioner: (A) to serve or act as a subject person for any insurer or production agency; or (B) to directly or indirectly vote any shares or other securities of an insurer or production agency.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If, after notice and a hearing, the commissioner finds that any subject person has violated paragraph (1) of this subdivision, the commissioner may order that subject person to pay to the commissioner a civil penalty, which may be recovered in a civil action, in an amount the commissioner may specify; provided however, that the amount of the civil penalty shall not exceed one thousand dollars ($1,000) for each day for which the violation continues.
</html:p>
<html:p>In determining the amount of civil penalty to be paid
to the commissioner under this paragraph, the commissioner shall consider the financial resources and good faith of the subject person charged, the gravity of the violation, the history of previous violations by the person, and other factors as in the opinion of the commissioner may be relevant.</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
If, after notice and a hearing, the commissioner finds that any production agency has knowingly aided and abetted a subject person in a violation of paragraph (1) of this subdivision, or subdivision (h) of Section 728, the commissioner may order that production agency to pay to the commissioner a civil penalty in an amount the commissioner may specify; provided however, that the amount of the civil penalty shall not exceed one thousand dollars ($1,000) for each violation or in the case of a continuing violation, one thousand dollars ($1,000) for each day for which the violation continues, up to a maximum of fifty thousand dollars ($50,000).
Continuation of the subject person’s salary or other employee benefits pending final disposition shall not be considered aiding and abetting a subject person.
</html:p>
<html:p>In determining the amount of civil penalty to be paid to the commissioner under this paragraph, the commissioner shall consider the financial resources and good faith of the subject person charged, the gravity of the violation, the history of previous violations by the person, and other factors as in the opinion of the commissioner may be relevant.</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Except as otherwise provided by this section, any hearing required by this section shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, subject to the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
At the option of the subject person, all hearings shall be a closed session and
private, and the records of the hearings shall not be made public unless the hearing results in a final order adverse to the subject person.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Where judicial review is sought by the subject person pursuant to Section 1085 of the Code of Civil Procedure, the court shall exercise its independent judgment upon the evidence.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
When a subject person to whom an order has been issued pursuant to subdivision (c) or (e) applies to the commissioner for a hearing pursuant to subparagraph (A) of paragraph (1) of subdivision (f), the Office of Administrative Hearings shall schedule the hearing on a priority basis at the earliest possible time and once the hearing is commenced, it shall not be continued for more than three business days without the consent of the subject person.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
If the Office of Administrative Hearings
cannot schedule the commencement of a hearing within 15 business days as provided by paragraph (1) of subdivision (f), and the subject person does not waive the person’s right to a hearing commencing within 15 days, the hearings may be conducted by administrative law judges appointed by the commissioner; the hearing shall be completed within 45 days of commencement, unless additional time is requested by the subject person. If the hearing is not completed within the 45 days, the order shall be deemed rescinded as if it had not been issued. The scheduling of other hearings before the administrative law judge shall not be considered good cause for purposes of this paragraph.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
Nothing in this section is intended to or shall be construed to create a private cause of action against an offending subject person or insurer or production agency that aids and abets a subject person, based on the standards established by this section or the
commissioner’s findings or orders pursuant to this section.
</html:p>
</ns0:Content>
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</ns0:BillSection>
<ns0:BillSection id="id_3BF326A3-64FA-4F3C-8601-7C516822DA11">
<ns0:Num>SEC. 21.</ns0:Num>
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Section 1807.5 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_7A1FBD0C-43EB-4CD8-AB0F-DAC535345C27">
<ns0:Num>1807.5.</ns0:Num>
<ns0:LawSectionVersion id="id_156D5B2F-452F-46E1-8E22-97F138B1D83D">
<ns0:Content>
<html:p>Except as provided in Sections 1669, 1738, and 1748.5, the commissioner shall not deny, suspend, or revoke any license, issued under this article, without first granting a hearing, upon reasonable notice to the applicant or licensee, except that he may temporarily suspend a license for a period not exceeding 15 days pending the hearing. Where a hearing is held under this section the proceedings shall be conducted in accordance with 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 pursuant to that
chapter.</html:p>
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</ns0:BillSection>
<ns0:BillSection id="id_6CA5EE08-53E9-4DAD-9B6E-C63C6CC64C6A">
<ns0:Num>SEC. 22.</ns0:Num>
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Section 1821 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_42EA6D74-6967-4F8E-ABF5-B8B6B4FB3580">
<ns0:Num>1821.</ns0:Num>
<ns0:LawSectionVersion id="id_3A133B3F-953A-4A5C-98D7-EB685595B0BC">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
A license shall not be refused by the commissioner without proceedings in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Sections 1724.5, 1733, 1734, 1735 and Articles 6 (commencing with Section 1666) and 13 (commencing with Section 1737) of Chapter 5 apply to persons licensed under this chapter, and “insurance agent” or “licensee”, as used in those provisions, include persons licensed under this chapter.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Subdivisions (a), (c), (e), (f), (g), and (h) of Section 1725.5 apply to persons licensed under this chapter, and “person” or “licensee,” as used in those provisions, include persons licensed under this chapter.
</html:p>
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<ns0:BillSection id="id_9A370966-6F40-4CD5-BD38-7EBB53A32A29">
<ns0:Num>SEC. 23.</ns0:Num>
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Section 1871.7 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_1A338D40-6D4C-4BD5-8EC7-77203EE74FA2">
<ns0:Num>1871.7.</ns0:Num>
<ns0:LawSectionVersion id="id_D5783017-7680-4043-95BD-5D1AED707375">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
It is unlawful to knowingly employ runners, cappers, steerers, or other persons to procure clients or patients to perform or obtain services or benefits pursuant to Division 4 (commencing with Section 3200) of the Labor Code or to procure clients or patients to perform or obtain services or benefits under a contract of insurance or that will be the basis for a claim against an insured individual or their insurer.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Every person who violates any provision of this section or Section 549, 550, or 551 of the Penal Code shall be subject, in addition to any other penalties that may be prescribed by law, to a civil penalty of not less than five thousand dollars ($5,000) nor more than ten thousand dollars ($10,000), plus an assessment of not more than three times
the amount of each claim for compensation, as defined in Section 3207 of the Labor Code or pursuant to a contract of insurance. The court shall have the power to grant other equitable relief, including temporary injunctive relief, as is necessary to prevent the transfer, concealment, or dissipation of illegal proceeds, or to protect the public. The penalty prescribed in this paragraph shall be assessed for each fraudulent claim presented to an insurance company by a defendant and not for each violation.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The penalties set forth in subdivision (b) are intended to be remedial rather than punitive, and shall not preclude, nor be precluded by, a criminal prosecution for the same conduct. If the court finds, after considering the goals of disgorging unlawful profit, restitution, compensating the state for the costs of investigation and prosecution, and alleviating the social costs of increased insurance rates due to fraud, that such a penalty
would be punitive and would preclude, or be precluded by, a criminal prosecution, the court shall reduce that penalty appropriately.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The district attorney or commissioner may bring a civil action under this section. Before the commissioner may bring that action, the commissioner shall be required to present the evidence obtained to the appropriate local district attorney for possible criminal or civil filing. If the district attorney elects not to pursue the matter, then the commissioner may proceed with the action.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Any interested persons, including an insurer, may bring a civil action for a violation of this section for the person and for the State of California. The action shall be brought in the name of the state. The action may be dismissed only if the court and the district attorney or the commissioner,
after providing written notice to the other government entity, gives written consent to the dismissal. The court may dismiss the action, notwithstanding the lack of consent from or any objection of the district attorney or the commissioner if the court determines, after a hearing, that the dismissal is in the interests of justice. Upon a showing of good cause, the hearing may be held in camera.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A copy of the complaint and written disclosure of substantially all material evidence and information the person possesses shall be served on the district attorney and commissioner. The complaint shall be filed in camera, shall remain under seal for at least 60 days from the date of service on the district attorney and commissioner, and shall not be
unsealed or served on the defendant until the court so orders. Public access to the records in an action pursuant to this section shall be prohibited for as long as those records are under seal. The prohibition on public access applies not only to filed documents but also to electronic records that would disclose information about the case, including the identity of any plaintiff or defendant. The local district attorney or commissioner may elect to intervene and proceed with the action within 60 days after the district attorney or commissioner receives both the complaint and the material evidence and information. If more than one governmental entity elects to intervene, the district attorney shall have precedence.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The district attorney or commissioner may, for good cause shown, move the
court for extensions of the time during which the complaint remains under seal under paragraph (2). The motions may be supported by affidavits or other submissions in camera. The seal shall remain in effect until a ruling is made on the motion and the court orders the complaint unsealed. The defendant shall not be required to respond to any complaint filed under this section until 20 days after the complaint is unsealed and served upon the defendant.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Before the expiration of the 60-day period or any extensions obtained under paragraph (3), the district attorney or commissioner shall either:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Proceed with the action, in which case the action shall be conducted by the district attorney or commissioner.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action. Even if the district attorney or commissioner has declined to proceed with the action, the requirements relating to consent to dismissal, as described in paragraph (1), shall continue to apply.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Even after the expiration of the seal period, the action shall not be unsealed until so ordered by the court.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
When a person or governmental agency brings an action under this section, no person other than the district attorney or commissioner may intervene or bring a related action based on the facts underlying the pending action unless that action is authorized by another statute or common law.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
If the district attorney or commissioner proceeds with the action, the district attorney or commissioner shall have the primary responsibility for prosecuting the action, and shall not be bound by an act of the person bringing the action. That person shall have the right to continue as a party to the action, subject to the limitations set forth in paragraph (2).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The district attorney or commissioner may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by
the district attorney or commissioner of the filing of the motion, and the court has provided the person with an opportunity for a hearing on the motion.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The district attorney or commissioner may settle the action with the defendant notwithstanding the objections of the person initiating the action if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances. Upon a showing of good cause, the hearing may be held in camera.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Upon a showing by the district attorney or commissioner that unrestricted participation during the course of the litigation by the person initiating the action would interfere with or unduly delay the district attorney’s or commissioner’s prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment, the court may, in its discretion, impose limitations
on the person’s participation, including, but not limited to, the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Limiting the number of witnesses the person may call.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Limiting the length of the testimony of those witnesses.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Limiting the person’s cross-examination of witnesses.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Otherwise limiting the participation by the person in the litigation.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Upon a showing by the defendant that unrestricted participation during the course of the litigation by the person initiating the action would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the person in the litigation.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
If the district attorney or commissioner elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action. If the district attorney or commissioner so requests, the district attorney or commissioner shall be served with copies of all pleadings filed in the action and shall be supplied with copies of all deposition transcripts, at the district attorney’s or commissioner’s expense. When a person proceeds with the action, the court, without limiting the status and rights of the person initiating the action, may nevertheless permit the district attorney or commissioner to intervene at a later date upon a showing of good cause.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
If at any time both a civil action for penalties and equitable relief pursuant to this section and a criminal action are pending against a defendant for substantially the same conduct, whether brought by the government or a private party, the civil
action shall be stayed until the criminal action has been concluded at the trial court level. The stay shall not preclude the court from granting or enforcing temporary equitable relief during the pendency of the actions. Whether or not the district attorney or commissioner proceeds with the action, upon a showing by the district attorney or commissioner that certain actions of discovery by the person initiating the action would interfere with a law enforcement or governmental agency investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay discovery for a period of not more than 180 days. A hearing on a request for the stay shall be conducted in camera. The court may extend the 180-day period upon a further showing in camera that the agency has pursued the criminal or civil investigation or proceedings with reasonable diligence and any proposed discovery in the civil action will interfere with the ongoing criminal or civil investigation or proceedings.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Notwithstanding subdivision (e), the district attorney or commissioner may elect to pursue its claim through any alternate remedy available to the district attorney or commissioner.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
If the district attorney proceeds with an action brought by a person under subdivision (e), that person shall, subject to subparagraph (B), receive at least 30 percent but not more than 40 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
If the commissioner has brought an action or has proceeded with an action brought by another person under this section on or after January 1, 2006, the commissioner shall be entitled to attorney’s
fees and costs in addition to any judgment, regardless of the date that judgment is entered. The court shall determine and award the commissioner the amount of reasonable attorney’s fees, including, but not limited to, reasonable fees for time expended by attorneys employed by the department and for costs incurred. Any attorney’s fees or costs awarded to the commissioner and collected shall be deposited in the Insurance Fund. In cases in which the commissioner has intervened, the commissioner and the person bringing the claim may stipulate to an allocation. The court may allocate the funds pursuant to the stipulation if, after the court’s ruling on objection by the district attorney, if any, the court finds it is in the interests of justice to follow the stipulation.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
If the commissioner has proceeded with an action, if there is no stipulation regarding allocation, and if a judgment has been obtained or a settlement has been reached with
the defendants, the court shall determine the allocation, upon motion of the commissioner or the person bringing the action, according to the following priority:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
The person bringing the action, regardless of whether that person paid money to the defendants as part of the acts alleged in the complaint, shall first receive the amount the court determines is reasonable for attorney’s fees, costs, and expenses that the court determines to have been necessarily incurred.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
The commissioner shall receive the amount the court determines for reasonable attorney’s fees and costs.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
If the person bringing the suit has paid moneys to the defendants as part of the acts alleged in the complaint, that person shall receive the amount paid to the defendants.
</html:p>
<html:p>
(IV)
<html:span class="EnSpace"/>
At least 30 percent, but not more than 40 percent, of the remaining assets or moneys, shall be allocated to the person bringing the action, depending upon the extent to which the person substantially contributed to the prosecution of the action.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Those portions of a judgment or settlement not distributed pursuant to this subdivision shall be paid to the General Fund of the state and, upon appropriation by the Legislature, shall be apportioned between the Department of Justice and the Department of Insurance for enhanced fraud investigation and prevention efforts.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Where the action is one that the court finds to be based primarily on disclosures of specific information, other than information provided by the person bringing the action, relating to allegations or transactions in a criminal, civil, or administrative hearing, in a legislative or administrative
report, hearing, audit, or investigation, or from the news media, the court may award those sums that it considers appropriate, but in no case more than 10 percent of the proceeds, taking into account the significance of the information and the role of the person bringing the action in advancing the case to litigation.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Any payment to a person under subparagraph (A) or under subparagraph (B) shall be made from the proceeds. The person shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorney’s fees and costs. All of those expenses, fees, and costs shall be awarded against the defendant.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
If the district attorney or commissioner does not proceed with an action under this section, the person bringing the action or settling the claim shall receive an amount that the court
decides is reasonable for collecting the civil penalty and damages. Except as provided in subparagraph (B), the amount shall not be less than 40 percent and not more than 50 percent of the proceeds of the action or settlement and shall be paid out of the proceeds. That person shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorney’s fees and costs. All of those attorney’s fees and costs shall be imposed against the defendant. The parties shall serve the commissioner and the local district attorney with complete copies of any and all settlement agreements, and terms and conditions, for actions brought under this article at least 10 days prior to filing any motion for allocation with the court under this paragraph. The court may allocate the funds pursuant to the settlement agreement if, after the court’s ruling on objection by the commissioner or the local district attorney, if any, the court finds it is in the interests of justice
to follow the settlement agreement.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
If the person bringing the action, as a result of a violation of this section has paid money to the defendant or to an attorney acting on behalf of the defendant in the underlying claim, then the person shall be entitled to up to double the amount paid to the defendant or the attorney if that amount is greater than 50 percent of the proceeds. That person shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorney’s fees and costs. All of those expenses, fees, and costs shall be awarded against the defendant.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
If a local district attorney has proceeded with an action under this section, one-half of the penalties not awarded to a private party, as well as any costs awarded shall go to the treasurer of the appropriate county. Those funds shall be used to investigate
and prosecute fraud, augmenting existing budgets rather than replacing them. All remaining funds shall go to the state and be deposited in the General Fund and, when appropriated by the Legislature, shall be apportioned between the Department of Justice and the Department of Insurance for enhanced fraud investigation and prevention efforts.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Whether or not the district attorney or commissioner proceeds with the action, if the court finds that the action was brought by a person who planned and initiated the violation of this section, that person shall be dismissed from the civil action and shall not receive any share of the proceeds of the action. The dismissal shall not prejudice the right of the district attorney or commissioner to continue the action on behalf of the state.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
If the district attorney or commissioner does not proceed with the action, and the person bringing
the action conducts the action, the court may award to the defendant its reasonable attorney’s fees and expenses if the defendant prevails in the action and the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
In no event may a person bring an action under subdivision (e) that is based upon allegations or transactions that are the subject of a civil suit or an administrative civil money penalty proceeding in which the Attorney General, district attorney, or commissioner is already a party.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
A court shall not have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing in a legislative or administrative report, hearing,
audit, or investigation, or from the news media, unless the action is brought by the district attorney or commissioner, the district attorney or commissioner proceeds with an action brought by a person under subdivision (e), or the person bringing the action is an original source of the information.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For purposes of this paragraph, “original source” means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the district attorney or commissioner before filing an action under this section that is based on the information.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Except as provided in subdivision (j), the district attorney or commissioner is not liable for expenses that a person incurs in bringing an action under this section.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
In civil actions
brought under this section in which the commissioner or a district attorney is a party, the court shall retain discretion to impose sanctions otherwise allowed by law, including the ability to order a party to pay expenses as provided in Sections 128.5 and 1028.5 of the Code of Civil Procedure.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by their employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in, an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole. That relief shall include reinstatement with the same seniority status the employee would have had but for the discrimination, two times the amount of
backpay, interest on the backpay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorney’s fees. An employee may bring an action in the appropriate superior court for the relief provided in this subdivision. The remedies under this section are in addition to any other remedies provided by existing law.
</html:p>
<html:p>
(
<html:i>l</html:i>
)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
An action pursuant to this section may not be filed more than three years after the discovery of the facts constituting the grounds for commencing the action.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Notwithstanding paragraph (1) no action may be filed pursuant to this section more than eight years after the commission of the act constituting a violation of this section or a violation of Section 549, 550, or 551 of the Penal Code.
</html:p>
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</ns0:BillSection>
<ns0:BillSection id="id_D32DB1CC-7931-49F5-98A3-B5477D571298">
<ns0:Num>SEC. 24.</ns0:Num>
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Section 1872.83 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:LawSection id="id_7014F32B-842C-4AAA-A807-C71C5D63665A">
<ns0:Num>1872.83.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The commissioner shall ensure that the Fraud Division aggressively pursues all reported incidents of probable workers’ compensation fraud, as defined in Sections 11760 and 11880, and in subdivision (a) of Section 1871.4, and in Section 549 of the Penal Code, and forwards to the appropriate disciplinary body the names, along with all supporting evidence, of any individuals licensed under the Business and Professions Code who are suspected of actively engaging in fraudulent activity. The Fraud Division shall forward to the Insurance Commissioner or the Director of Industrial Relations, as appropriate, the name, along with all supporting evidence, of any insurer, as defined in subdivision (c) of Section 1877.1, suspected of actively engaging in the fraudulent denial of claims.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
To fund increased investigation and prosecution of workers’ compensation fraud, and of willful failure to secure payment of workers’ compensation, in violation of Section 3700.5 of the Labor Code, there shall be an annual assessment as follows:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The aggregate amount of the assessment shall be determined by the Fraud Assessment Commission, which is hereby established. The commission shall be composed of seven members consisting of two representatives of organized labor, two representatives of self-insured employers, one representative of insured employers, one representative of workers’ compensation insurers, and the President of the State Compensation Insurance Fund, or their designee.
</html:p>
<html:p>The Governor shall appoint members representing organized labor, self-insured employers, insured employers, and insurers. The term of office of members of
the commission shall be four years, and a member shall hold office until the appointment of a successor. The President of the State Compensation Insurance Fund shall be an ex officio, voting member of the commission. Members of the commission shall receive one hundred dollars ($100) for each day of actual attendance at commission meetings and other official commission business, and shall also receive their actual and necessary traveling expenses incurred in the performance of commission duties. Payment of per diem and travel expenses shall be made from the Workers’ Compensation Fraud Account in the Insurance Fund, established in paragraph (4), upon appropriation by the Legislature.</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
In determining the aggregate amount of the assessment, the Fraud Assessment Commission shall consider the advice and recommendations of the Fraud Division and the commissioner.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The aggregate
amount of the assessment shall be collected by the Director of Industrial Relations pursuant to Section 62.5 of the Labor Code. The Fraud Assessment Commission shall annually advise the Director of Industrial Relations, not later than March 15, of the aggregate amount to be assessed for the next fiscal year.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The amount collected, together with the fines collected for violations of the unlawful acts specified in Sections 1871.4, 11760, and 11880, Section 3700.5 of the Labor Code, and Section 549 of the Penal Code, shall be deposited in the Workers’ Compensation Fraud Account in the Insurance Fund, which is hereby created, and may be used, upon appropriation by the Legislature, only for enhanced investigation and prosecution of workers’ compensation fraud and of willful failure to secure payment of workers’ compensation as provided in this section.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
For each fiscal year, the
total amount of revenues derived from the assessment pursuant to subdivision (b) shall, together with amounts collected pursuant to fines imposed for unlawful acts described in Sections 1871.4, 11760, and 11880, Section 3700.5 of the Labor Code, and Section 549 of the Penal Code, not be less than three million dollars ($3,000,000). Any funds appropriated by the Legislature pursuant to subdivision (b) that are not expended in the fiscal year for which they have been appropriated, and that have not been allocated under subdivision (f), may be applied to satisfy for the immediately following fiscal year the minimum total amount required by this subdivision or, subject to appropriation by the Legislature, may be used to augment funding in the immediately following fiscal year. The money shall not be transferred to the General Fund.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
After incidental expenses, at least 40 percent of the funds to be used for the purposes of this section shall be
provided to the Fraud Division of the Department of Insurance for enhanced investigative efforts, and at least 40 percent of the funds shall be distributed to district attorneys, pursuant to a determination by the commissioner with the advice and consent of the division and the Fraud Assessment Commission, as to the most effective distribution of moneys for purposes of the investigation and prosecution of workers’ compensation fraud cases and cases relating to the willful failure to secure the payment of workers’ compensation. Each district attorney seeking a portion of the funds shall submit to the commissioner an application setting forth in detail the proposed use of any funds provided. A district attorney receiving funds pursuant to this subdivision shall submit an annual report to the commissioner with respect to the success of their efforts. Upon receipt, the commissioner shall provide copies to the Fraud Division and the Fraud Assessment Commission of any application, annual report, or other documents
with respect to the allocation of money pursuant to this subdivision. Both the application for moneys and the distribution of moneys shall be public documents. Information submitted to the commissioner pursuant to this section concerning criminal investigations, whether active or inactive, shall be confidential.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
If a district attorney is determined by the commissioner to be unable or unwilling to investigate and prosecute workers’ compensation fraud claims or claims relating to the willful failure to secure the payment of workers’ compensation, the commissioner shall discontinue distribution of funds allocated for that county and may redistribute those funds according to this subdivision.
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The commissioner shall promptly determine whether any other county could assert jurisdiction to prosecute the fraud claims or claims relating to the willful failure to secure the payment
of workers’ compensation that would have been brought in the nonparticipating county, and, if so, the commissioner may award funds to conduct the prosecutions redirected pursuant to this subdivision. These funds may be in addition to any other fraud prosecution funds or claims relating to the willful failure to secure the payment of workers’ compensation prosecution otherwise awarded under this section. Any district attorney receiving funds pursuant to this subdivision shall first agree that the funds shall be used solely for investigating and prosecuting those cases of workers’ compensation fraud or claims relating to the willful failure to secure the payment of workers’ compensation that are redirected pursuant to this subdivision and submit an annual report to the commissioner with respect to the success of the district attorney’s efforts. The commissioner shall keep the Fraud Assessment Commission fully informed of all reallocations of funds under this paragraph.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If the commissioner determines that no district attorney is willing or able to investigate and prosecute the workers’ compensation fraud claims or claims relating to the willful failure to secure the payment of workers’ compensation arising in the nonparticipating county, the commissioner, with the advice and consent of the Fraud Assessment Commission, may award to the Attorney General some or all of the funds previously awarded to the nonparticipating county. Before the commissioner may award any funds, the Attorney General shall submit to the commissioner an application setting forth in detail their proposed use of any funds provided and agreeing that any funds awarded shall be used solely for investigating and prosecuting those cases of workers’ compensation fraud or claims relating to the willful failure to secure the payment of workers’ compensation that are redirected pursuant to this subdivision. The Attorney General shall submit an
annual report to the commissioner with respect to the success of the fraud prosecution efforts of their office.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Neither the Attorney General nor any district attorney shall be required to relinquish control of any investigation or prosecution undertaken pursuant to this subdivision unless the commissioner determines that satisfactory progress is no longer being made on the case or the case has been abandoned.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
A county that has become a nonparticipating county due to the inability or unwillingness of its district attorney to investigate and prosecute workers’ compensation fraud or the willful failure to secure the payment of workers’ compensation shall not become eligible to receive funding under this section until it has submitted a new application that meets the requirements of subdivision (d) and the applicable regulations.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
If in any fiscal year the Fraud Division does not use all of the funds made available to it under subdivision (d), any remaining funds may be distributed to district attorneys pursuant to a determination by the commissioner in accordance with the same procedures set forth in subdivision (d).
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
The commissioner shall adopt rules and regulations to implement this section in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). Included in the rules and regulations shall be the criteria for redistributing funds to district attorneys and the Attorney General. The adoption of the rules and regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
The department shall report to the Governor, the Legislature, to the committees of the Senate and Assembly having jurisdiction over insurance, and the Fraud Assessment Commission on the activities of the Fraud Division and district attorneys supported by the funds provided by this section in the annual report submitted pursuant to Section 12922.
</html:p>
<html:p>The annual report shall include, but is not limited to, all of the following information for the department and each district attorney’s office:</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
All allocations, distributions, and expenditures of funds.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The number of search warrants issued.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The number of arrests and prosecutions, and the aggregate number of parties involved in each.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The number of convictions and the names of all convicted fraud perpetrators.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The estimated value of all assets frozen, penalties assessed, and restitutions made for each conviction.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Any additional items necessary to fully inform the Fraud Assessment Commission and the Legislature of the fraud-fighting efforts financed through this section.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
In order to meet the requirements of subdivision (h), the department may submit a biannual information request to those district attorneys who have applied for and received funding through
the annual assessment process under this section.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
Assessments levied or collected to fight workers’ compensation fraud and insurance fraud are not taxes. Those funds are entrusted to the state to fight fraud and the willful failure to secure the payment of workers’ compensation by funding state and local investigation and prosecution efforts. Accordingly, any funds resulting from assessments, fees, penalties, fines, restitution, or recovery of costs of investigation and prosecution deposited in the Insurance Fund shall not be deemed “unexpended” funds for any purpose and, if remaining in that account at the end of any fiscal year, shall be applied as provided in subdivision (f) and to offset or augment subsequent years’ program funding.
</html:p>
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</ns0:BillSection>
<ns0:BillSection id="id_71B430D4-E698-4A53-A8FA-4C82CCA0907A">
<ns0:Num>SEC. 25.</ns0:Num>
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Section 10163.2 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_96196395-A732-49F8-8120-B9061484CC3C">
<ns0:Num>10163.2.</ns0:Num>
<ns0:LawSectionVersion id="id_DE799ABC-5E6B-4386-9271-800C67651A40">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
This section shall apply to all policies issued on or after the operative date of this section as defined herein. Except as provided in subdivision (g), the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of (1) the then present value of the future guaranteed benefits provided for by the
policy; (2) 1 percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years; and (3) 125 percent of the nonforfeiture net level premium as hereinafter defined. Provided, however, that in applying the percentage specified in (3) no nonforfeiture net level premium shall be deemed to exceed 4 percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years. The date of issue of a policy for the purpose of this section shall be the date as of which the rated age of the insured is determined.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy, divided by the present value, at the date of issue of the policy, of an annuity of
1 dollar ($1) per annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
In the case of policies that cause on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or that provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums, the future adjusted premiums, nonforfeiture net level premiums, and present values shall be recalculated on the assumption that future benefits and
premiums do not change from those stipulated by the policy immediately after the change.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Except as otherwise provided in subdivision (g), the recalculated future adjusted premiums for any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all such future adjusted premiums shall be equal to the excess of (1) the sum of (A) the then present value of the then future guaranteed benefits provided for by the policy and (B) the additional expense allowance, if any, over (2) the then cash
surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of (1) 1 percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first 10 policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first 10 policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and (2) 125 percent of the increase, if positive, in the nonforfeiture net level premium.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (1) by (2) where:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
It equals the sum of:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The nonforfeiture net level premium applicable prior to the change times the present value of an annuity of 1 dollar ($1) per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred, and
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The present value of the increase in future guaranteed benefits provided for by the policy, and
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
It equals the present value of an annuity of 1
dollar ($1) per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
Notwithstanding any other provision of this section to the contrary, in the case of a policy issued on a substandard basis that provides reduced graded amounts of insurance so that, in each policy year, such policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis that provides higher uniform amounts of insurance, adjusted premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform amounts of insurance on the standard basis.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
All adjusted premiums and present values referred to in this article shall for all policies of ordinary insurance be calculated on the basis of (1) the Commissioners
1980 Standard Ordinary Mortality Table or (2) at the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; shall for all policies of industrial insurance be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table; and shall for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this section for policies issued in that calendar year. Provided, however, that:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
At the option of the company, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this section, for policies issued in the immediately preceding calendar year.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by Section 10160, shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
A company may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1980 Extended Term Insurance Table for policies
of ordinary insurance and not more than the Commissioners 1961 Industrial Extended Term Insurance Table for policies of industrial insurance.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on appropriate modifications of the aforementioned tables.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
For policies issued prior to the operative date of the valuation manual, any Commissioners Standard Ordinary mortality tables, adopted after 1980 by the National Association of Insurance Commissioners (NAIC), or its successor, that are approved by regulation promulgated or bulletin issued by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980
Extended Term Insurance Table.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners Standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table. If the commissioner approves by regulation any Commissioners Standard Ordinary mortality table adopted by the NAIC for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
For policies issued prior to the operative date of
the valuation manual, any Commissioners Standard Industrial mortality tables, adopted after 1980 by the NAIC, or its successor, that are approved by regulation promulgated or bulletin issued by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners Standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1961 Standard Ordinary Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table. If the commissioner approves by regulation any Commissioners Standard Ordinary mortality table adopted by the NAIC for use in determining the minimum nonforfeiture
standard for policies issued on or after the operative date of the valuation manual then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The nonforfeiture interest rate.
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
For policies issued prior to the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to 125 percent of the calendar year statutory valuation interest rate for the policy as defined in the Standard Valuation Law, rounded to the nearer one-fourth of 1 percent, provided, however, that the nonforfeiture interest rate shall not be less than 4 percent.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For policies issued on or after the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy
issued in a particular calendar year shall be provided by the valuation manual.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
Notwithstanding any other provision in this code to the contrary, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form that involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
After the effective date of this section, any company may file with the commissioner a written notice of its election to comply with this section after a specified date before January 1, 1989, which shall be the operative date of this section for such company. If a company makes no such election, the operative date of this section for such company shall be January 1, 1989.
</html:p>
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</ns0:BillSection>
<ns0:BillSection id="id_74D5DB0B-29EC-4A49-87E4-21EA4545D422">
<ns0:Num>SEC. 26.</ns0:Num>
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Section 10168.25 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_B1860B45-F4D0-4279-9024-B122961CF837">
<ns0:Num>10168.25.</ns0:Num>
<ns0:LawSectionVersion id="id_0525BFD7-BE6C-421E-93D1-D1F5CE4586FB">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
This section shall apply to contracts issued on and after January 1, 2006, and may be applied by a company, on a contract-form-by-contract-form basis, to any contract issued on or after January 1, 2004, and before January 1, 2006.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The minimum values as specified in Sections 10168.3, 10168.4, 10168.5, 10168.6, and 10168.8 of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to that time, at the rates of
interest indicated in subdivision (d), of the net considerations (as hereafter defined) paid prior to that time, decreased by the sum of all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Any prior withdrawals from or partial surrenders of the contract, accumulated at the rates of interest indicated in subdivision (d).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
An annual contract charge of fifty dollars ($50), accumulated at the rates of interest indicated in subdivision (d).
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Any state premium tax paid by the company for the contract, accumulated at the rates of interest indicated in subdivision (d). However, the minimum nonforfeiture amount may not be decreased by this amount if the premium tax is subsequently credited back to the company.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The amount of any indebtedness to the company on the contract,
including interest due and accrued.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to 87.5 percent of the gross considerations credited to the contract during that contract year.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of 3 percent per annum and the following, which shall be specified in the contract if the interest rate will be reset:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The five-year Constant Maturity Treasury Rate reported by the Federal Reserve as of a date, or averaged over a period, rounded to the nearest one-twentieth of 1 percent, specified in the contract no longer than 15 months prior to the contract issue date or redetermination date under paragraph (2), reduced by 125
basis points, where, for contracts issued before January 1, 2022, the resulting rate is not less than 1 percent or 100 basis points, and, for contracts issued on or after January 1, 2022, the resulting rate is not less than 0.15 percent or 15 basis points.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis, and period, if any, shall be stated in the contract. The basis is the date, or average over a specified period, that produces the value of the five-year Constant Maturity Treasury Rate to be used at each redetermination date.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
During the period or term that a contract provides substantive
participation in an equity indexed benefit, it may increase the reduction described in paragraph (1) of subdivision (d) by up to an additional 100 basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. Lacking a demonstration that is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The commissioner may adopt regulations to implement the provisions of subdivision (e) and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts with respect to
which the commissioner determines adjustments are justified.
</html:p>
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<ns0:BillSection id="id_DC905AAF-CE4D-4E9D-948A-BD1B042E337C">
<ns0:Num>SEC. 27.</ns0:Num>
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Section 11623 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_21E002AC-CF7E-4A0D-AABE-D8999FE1D314">
<ns0:Num>11623.</ns0:Num>
<ns0:LawSectionVersion id="id_10119D7B-387A-4C0F-937B-5F6837B1D9C6">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
To assist the commissioner in carrying out the purposes of this article, an advisory committee composed of 15 members is created. The commissioner shall administer and operate the plan as authorized by law. The commissioner shall consult with the advisory committee on a regular basis on policy matters affecting the operation of the plan.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Eight members representing subscribing insurers shall be elected annually by subscribing insurers. The commissioner shall appoint the noninsurer members. The term of the noninsurer members shall be for two years. Staggered terms shall be established by drawing lots so that a simple majority of the members shall
initially serve a two-year term and the remainder shall initially serve a one-year term. Four members shall represent the public. Two members shall represent producers. The remaining member is the commissioner or his or her designee.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Each insurer representative serving shall be either (A) a salaried employee or officer of the named insurer or (B) a salaried employee or officer of another insurer from a group of insurance companies under the same management as the named insurer. A salaried employee or officer of the holding company of the named insurer may also be designated as the representative. At least two insurer representatives shall be employed by insurers having their principal headquarters located in California. At least two insurer representatives shall represent companies who have average annual automobile liability premiums in California below one hundred million dollars ($100,000,000) in the prior three
years. At least one insurer representative shall represent an insurer with average annual automobile liability premiums in California exceeding one hundred million dollars ($100,000,000) in the prior three years. At least one insurer representative shall represent an insurer with average annual automobile liability premiums in California exceeding seven hundred million dollars ($700,000,000) in the prior three years.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Public members shall be paid two hundred fifty dollars ($250) per meeting and shall be reimbursed all reasonable expenses incurred.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The commissioner shall remove members for nonattendance. Unless satisfactory excuse is made in writing to the commissioner in a timely manner, nonattendance shall mean the failure to appear at more than two regularly scheduled meetings in a 12-month period. Should the member who is removed represent a company or agency, another
representative from the company or agency may not be appointed for a period of not less than two years.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The advisory committee with the approval of the commissioner shall appoint a manager to carry out the purposes of this article, employ sufficient personnel to provide services necessary to the operation of the plan, and contract for the provision of statistical and actuarial services.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
The cost of the plan, including any personnel and contracting costs, shall be fairly apportioned among the subscribing insurers to whom assignments may be made. The costs associated shall be directly attributable to the management of the plan and directly related to its programs. In consultation with the advisory committee, the commissioner shall develop, issue, and adopt regulations to carry out the purposes of this article.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Notwithstanding this act, which changes the status of the governing committee to that of an advisory committee, the committee shall have the right to retain counsel of its choice pursuant to a selection process adopted by the committee and the right and necessary standing to bring and defend actions in judicial and administrative proceedings related to the plan in the name of the plan, with all powers attendant thereto including the right to retain consultants, counsel, and expert witnesses of its choice.
</html:p>
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</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_59B2A352-8F02-4E24-8F58-C0282BB857A6">
<ns0:Num>SEC. 28.</ns0:Num>
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Section 11797 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_E7935AC7-1007-4484-8EA5-7DE3FBE53AAB">
<ns0:Num>11797.</ns0:Num>
<ns0:LawSectionVersion id="id_C2E8A802-7FE0-45E1-8386-03B436C9DFAE">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The board of directors shall cause all moneys in the State Compensation Insurance Fund that are in excess of current requirements to be invested and reinvested, from time to time, in the same manner as provided for private insurance carriers pursuant to Article 3 (commencing with Section 1170) and Article 4 (commencing with Section 1190) of Chapter 2 of Part 2 of Division 1, but excluding Sections 1191, 1191.1, 1191.5, 1192.2, 1192.4, 1192.6, 1192.7, 1192.95, 1192.10, 1194.7, 1194.8, 1194.81, 1194.82, 1194.85, 1198, and 1199, and excluding Section 1192.9, except as provided in subdivision (d). Notwithstanding the foregoing, the State Compensation Insurance Fund may invest or reinvest an aggregated maximum of 20 percent of moneys that are in excess of the admitted assets over the liabilities and required reserves in the
investments allowed pursuant to Sections 1191, 1192.4, 1192.6, 1192.10, 1194.7, and 1198.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Notwithstanding any other law, the State Compensation Insurance Fund may purchase general obligation bonds or other evidence of indebtedness issued by the state, including, but not limited to, warrants issued pursuant to Part 4 (commencing with Section 17000) of Division 4 of Title 2 of the Government Code or notes issued pursuant to Part 5 (commencing with Section 17300) of Division 4 of Title 2 of the Government Code, in any amount and to enter into purchase contracts with the state for this purpose.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Notwithstanding any other law, the State Compensation Insurance Fund may purchase Property Assessed Clean Energy (PACE) bonds, as defined in Section 26054 of the Public Resources Code.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The bonds or other evidence of indebtedness specified in paragraph (1), upon delivery to the State Compensation Insurance Fund, shall, for all purposes, be valid and binding obligations of the issuer thereof, be validly issued and outstanding in accordance with their stated terms, and not be deemed to be owned by or on behalf of the issuer thereof.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Notwithstanding any other law, the State Compensation Insurance Fund may invest in the discretionary investments authorized pursuant to Section 1210, but those investments shall not exceed the lesser of 2.5 percent of its admitted assets or 10 percent of moneys that are in excess of the admitted assets over the liabilities and required reserves.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
Notwithstanding subdivision (a) or any other law, the State Compensation Insurance Fund may invest in money market mutual
funds that comply with Section 1192.9, but shall not invest in a money market mutual fund that holds any assets in foreign investments, as defined in Section 1240. Investments in money market mutual funds made by the State Compensation Insurance Fund shall not exceed the lesser of 2.5 percent of its admitted assets or 10 percent of moneys that are in excess of the admitted assets over the liabilities and required reserves. The commissioner shall retain all remedies available, including the remedies in subdivision (d) of Section 1192.9, to enforce compliance by the State Compensation Insurance Fund with the money market mutual fund investment authority granted by this subdivision.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The board of directors shall provide an annual and quarterly investment report to the Department of Insurance on investments made pursuant to this section, as specified by the
department.
</html:p>
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</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_DAA9375D-CE6D-4D7C-B841-E031896FDED4">
<ns0:Num>SEC. 29.</ns0:Num>
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Section 12928.7 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_5C5C7E34-A692-45CC-AB2E-B52E62465218">
<ns0:Num>12928.7.</ns0:Num>
<ns0:LawSectionVersion id="id_55E7B1DD-72ED-4C82-BB17-3550CA66D63C">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The commissioner may order a respondent to provide restitution for a loss arising from the respondent’s conduct. If the facts and equity permit, with a restitution order, the commissioner may issue an order of rescission enforceable on any person subject to the commissioner’s jurisdiction.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
A restitution order under this section shall meet all of the following requirements:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The respondent shall be subject to the commissioner’s jurisdiction.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The restitution order shall be ancillary to another proceeding authorized by this code in which the commissioner does both of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Determines the respondent violated this code or the standards of conduct applicable to persons acting in the capacity the respondent was acting in or purporting to act in when the loss occurred.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Issues an order imposing a cease and desist order, an order for a monetary penalty, or another sanction with respect to the respondent’s conduct.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The restitution order shall cite the factual basis for the restitution order.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The restitution order shall state the persons, or classes of persons, who suffered a loss.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The restitution order shall state the amount to be paid or property to be returned as restitution.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
A
rescission or restitution order shall be subject to judicial review in the same manner and at the same time as the order to which it is ancillary.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
A rescission or restitution order may be judicially enforced in an action brought by the commissioner, the Attorney General, a district attorney, a city attorney, or any person owed restitution pursuant to the order. In that action, the court may award attorney’s fees and court costs to a prevailing plaintiff.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
This section does not apply to an insurer authorized to transact business in this state or to a placement of insurance with an insurer that was in compliance with Section 1765.1 or 1765.2 at the time of the placement. This section does not apply to a person with respect to acts within the scope of a license issued under Chapter 5 (commencing with Section 1621), Chapter 5A (commencing with Section 1759), or Chapter 6
(commencing with Section 1760) of Part 2 if the person holds that license at the time of those acts.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The commissioner may order a respondent who is ordered to provide restitution pursuant to this section to reimburse the commissioner for the commissioner’s costs of implementing and enforcing this section, including attorney’s fees. The commissioner shall not credit any funds received from a respondent towards payment of a monetary penalty until restitution has been tendered to all persons to whom restitution is owed, or to the commissioner on their behalf, as required by a restitution order.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
This section does not
limit or restrict actions, remedies, or procedures otherwise available to the commissioner, the department, or any person pursuant to an administrative or civil action to enforce any law. It is not a defense in an administrative or civil action that the commissioner did not order a person to pay restitution.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
This section does not expand, limit, or otherwise affect the commissioner’s authority to seek or to have sought restitution, refunds, or penalties against insurers, except as expressly provided.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
As used in this section, “restitution” means the full amount that will compensate each person for their direct and indirect financial and nonfinancial losses proximately caused by the respondent’s violations.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
Money received by the commissioner for distribution to persons as restitution pursuant to this section
or Section 12928.6 or 12976 shall be deposited into the Insurance Fund.
</html:p>
</ns0:Content>
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</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_86FBF63E-8EA6-46AC-A25D-9C1C1CB21F19">
<ns0:Num>SEC. 30.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'15027.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 15027 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_FDD1E292-D8D0-4C27-9A76-0A974D27D79D">
<ns0:Num>15027.</ns0:Num>
<ns0:LawSectionVersion id="id_B0B98CEC-A65E-4FD1-88B5-4E586BC4272C">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
A licensee shall not, directly or indirectly, act within this state as a public insurance adjuster without having first entered into a contract, in writing, on a form approved by the insurance commissioner and executed in duplicate by the public adjuster and the insured or a duly authorized representative. One original contract shall be kept on file by the licensee, available at all times for inspection, without notice, by the commissioner or his or her duly authorized representative, and one original contract shall be given to the insured.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The written contract between the licensee and the insured shall contain each of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Title of “Public Adjuster Contract.”
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The name, business name, license number, email address, telephone number, and California business address of the licensee.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The name and address of the insured.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
A description of the loss and its location, if applicable.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The name of the insurer and the policy number, if known.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The full salary, fee, commission, or other consideration the licensee is to receive for services under the contract.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
A
public adjuster’s fee, commission, or other valuable consideration shall not cause the insured to receive less than any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
A description of the services to be provided to the insured.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
Signatures of the licensee and the insured.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
The date the contract was signed by the licensee and the date the contract was signed by the insured.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
The following statement: “As a public adjuster, I am required by the California Insurance Code to post a surety bond in the sum of $20,000 to cover certain kinds of claims made by you, the insured. If you have any questions concerning the surety bond, you may contact the California
Department of Insurance Licensing Hotline at 1-800-967-9331 or www.insurance.ca.gov.”
</html:p>
<html:p>
(12)
<html:span class="EnSpace"/>
A statement of the compensation to the licensee, including the percentage and base to which the percentage applies.
</html:p>
<html:p>
(13)
<html:span class="EnSpace"/>
A statement that the insured has the right to cancel the contract within three business days of signing it and being provided the signed contract.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
A contract covered by this section shall not contain a contract term that does any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Allows the licensee’s fee to be collected when money is due from an insurer, but not paid, or allows a licensee to collect the entire fee from the first payment issued by an insurer, rather than as a percentage of each payment issued by an insurer.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Requires the insured to authorize an insurer to issue a payment only in the name of the licensee.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Imposes late fees or collection costs on the insured.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
A licensee shall not solicit or attempt to solicit a client for employment during a loss-producing occurrence. A loss-producing occurrence continues to exist when any of the following conditions exist at the property that is subject to solicitation:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Any of the circumstances that caused the loss are present at the property where the solicitation would otherwise take place.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Emergency responders are present at the property where the solicitation would otherwise take place.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
An evacuation order is still in effect at the property where the solicitation would otherwise take place.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
A licensee or any other person or entity offering, for a fee, service regulated by this chapter shall not solicit a policyholder for employment or initiate any contact with a policyholder between the hours of 6 p.m. and 8 a.m., unless requested by the policyholder.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
A licensee shall not use any form of contract other than that approved by the commissioner and that contains each of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
A provision allowing the client to cancel the contract by written notice sent or delivered by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee by midnight of the third business day
after the day on which the client signs a contract that complies with this section and is provided a copy of that signed contract. Each copy of the contract shall contain a completed form, captioned “Notice of Cancellation,” that shall be placed at the end of the contract and be separated from the remainder of the contract by a printed line. Nothing shall be printed on the reverse side of the notice form. The notice form shall be completed by the licensee, and shall contain in type of at least 10-point the following statement written in the same language, e.g., Spanish, as used in the contract:
</html:p>
<html:p>
<html:h1>Notice of Cancellation</html:h1>
</html:p>
<html:table id="id_522285D4-8EA7-4770-A42E-95FAC18FE632">
<html:colgroup>
<html:col width="207.0"/>
<html:col width="207.0"/>
</html:colgroup>
<html:tbody>
<html:tr>
<html:td/>
<html:td>
<html:span class="UnderlinedLeaders"/>
</html:td>
</html:tr>
<html:tr>
<html:td/>
<html:td align="center">(Date of Contract)</html:td>
</html:tr>
</html:tbody>
</html:table>
<html:p>You may cancel
this contract within three business days from the above date that you signed the contract and you were provided with a copy of that signed contract, except that, as it pertains to a disaster as defined in Section 15001, your right to cancel is five calendar days without any penalty or obligation to pay your public adjuster, other than for reimbursement of moneys paid by your public adjuster for out-of-pocket emergency expenses for you or on your behalf. If your public adjuster seeks reimbursement from you for out-of-pocket emergency expenses, your public adjuster shall provide you with an itemized statement of those emergency expenses advanced to you or on your behalf if the cancellation is made within the first three business days after the contract was signed by you and you were provided a copy of the signed contract. Nothing in this contract permits your public adjuster to recover any costs, except for out-of-pocket emergency expenses advanced to you.</html:p>
<html:p>If you
cancel, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.</html:p>
<html:p>To cancel this contract, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of this cancellation notice, or any other written notice, or send an email to:</html:p>
<html:table id="id_56848793-7424-4B14-8F24-28083CB07090">
<html:tbody>
<html:tr>
<html:td colspan="2" width="406">
<html:span class="UnderlinedLeaders"/>
</html:td>
</html:tr>
<html:tr>
<html:td align="center" colspan="2" valign="middle" width="406">(name of public adjuster)</html:td>
</html:tr>
<html:tr>
<html:td colspan="2" width="406">
at
<html:br/>
</html:td>
</html:tr>
<html:tr>
<html:td colspan="2" width="406">
<html:span class="UnderlinedLeaders"/>
</html:td>
</html:tr>
<html:tr>
<html:td align="center" colspan="2" valign="middle" width="406">
(public adjuster’s California business address)
<html:br/>
(public adjuster’s email address)
<html:p>
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
</html:tr>
<html:tr>
<html:td colspan="2" width="406">
not later than midnight of
<html:span class="UnderlinedLeaders"/>
</html:td>
</html:tr>
<html:tr>
<html:td width="406"/>
<html:td align="center" valign="bottom" width="406">(Date)</html:td>
</html:tr>
<html:tr>
<html:td align="left" colspan="2" valign="bottom" width="406">
I hereby cancel this contract
<html:span class="UnderlinedLeaders"/>
</html:td>
</html:tr>
<html:tr>
<html:td width="406"/>
<html:td align="center" valign="bottom" width="406">(Date)</html:td>
</html:tr>
<html:tr>
<html:td align="left" colspan="2" valign="bottom" width="406">
<html:span class="UnderlinedLeaders"/>
</html:td>
</html:tr>
<html:tr>
<html:td align="center" colspan="2" valign="bottom" width="406">(Client’s signature)</html:td>
</html:tr>
</html:tbody>
</html:table>
<html:p>
(2)
<html:span class="EnSpace"/>
The statement “WE REPRESENT THE INSURED ONLY” prominently displayed in at least 10-point type.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
A provision disclosing the percentage of the insured’s claim, or other fee, that the licensee will charge for his or her services. The licensee shall obtain the initials of the insured next to this provision.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
A conspicuous statement in at least 10-point type in immediate proximity to the space reserved for the client’s signature, as follows: “You may cancel this contract at any time before midnight of the third business day after the date of this contract. See the notice of
cancellation form at the end of this contract for an explanation of this right.”
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
A licensee shall not knowingly make any false report to his or her employer or divulge to any other person, except as he or she may be required by law to do so, any information acquired by him or her except at the direction of the employer or a client for whom the information is obtained.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
A licensee shall not use a badge in connection with the official activities of the licensee’s business.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
A licensee shall not permit an employee or agent in his or her own name to advertise, engage clients, furnish reports, or present bills to clients, or in any manner whatever to conduct business for which a license is required under this chapter.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
Pursuant to subdivisions
(a) and (c) of Section 15006, the commissioner shall have the authority to enforce the provisions of this chapter and prosecute violations thereunder committed by unlicensed persons or entities that hold themselves out or act as public insurance adjusters.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
For purposes of this section, “business day” shall have the same meaning given to that term in subdivision (e) of Section 1689.5 of the Civil Code, as in effect on the operative date of this statute.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
The contract and the notice of cancellation set forth in paragraph (1) of subdivision (f) shall be written in the same language, e.g., Spanish, as principally used in the negotiation of the contract.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
Within five business days after a contract has been canceled, the licensee shall tender to the client any payments made by the client and any note or other
evidence of indebtedness, including an itemized statement of all amounts tendered to the client.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
The licensee is not entitled to compensation for services performed prior to cancellation, other than for reimbursement of moneys paid by the licensee for out-of-pocket emergency expenses for the client or on behalf of the client. If the licensee seeks reimbursement from the client for out-of-pocket emergency expenses, and if the cancellation is made within the first three business days after the contract was initiated, the licensee shall provide the client with an itemized statement of those emergency expenses advanced to the client or on behalf of the client by the licensee. Nothing in this subdivision shall permit the licensee to recover any costs, except for out-of-pocket emergency expenses advanced to the client. Any security interest shall be canceled upon cancellation of the contract.
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
Notice of cancellation given by the client need not take the particular form specified in paragraph (1) of subdivision (f). Notice of cancellation, however expressed, is effective if it indicates the intention of the client not to be bound by the contract.
</html:p>
<html:p>
(p)
<html:span class="EnSpace"/>
Cancellation occurs when the client gives written notice of cancellation by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee at the address specified in the contract.
</html:p>
<html:p>
(q)
<html:span class="EnSpace"/>
Notice of cancellation, if given by mail, is effective when sent by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, properly addressed with postage prepaid.
</html:p>
<html:p>
(r)
<html:span class="EnSpace"/>
Until the licensee has complied with this section, the client may cancel the contract.
</html:p>
<html:p>
(s)
<html:span class="EnSpace"/>
The contracts shall be executed in duplicate. The licensee shall retain one original contract, and shall provide the insured with an original contract.
</html:p>
<html:p>
(t)
<html:span class="EnSpace"/>
The licensee shall provide the client with an original contract and notice of cancellation at the time the client signs the contract.
</html:p>
<html:p>
(u)
<html:span class="EnSpace"/>
Any confession of judgment or waiver of the provisions of this chapter shall be deemed contrary to public policy and shall be void and unenforceable.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Prior to the signing of the contract, the licensee shall provide the insured with a separate printed disclosure document in the following form that bears the name and license number of the licensee:
</html:p>
<html:p>
<html:h1>“DISCLOSURE</html:h1>
</html:p>
<html:p>There
are three types of insurance adjusters that could be involved in the processing of your insurance claim. The definitions of the three types are as follows:</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Public adjusters means the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Company adjusters means the insurance adjusters who are employees of your insurance company. They represent your insurance company and are paid by your insurance company. They will not charge you a fee and are not individually licensed or tested by the
State of California.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Independent adjusters means the insurance adjusters who are hired on a contract basis by your insurance company to represent the company in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee.
</html:p>
<html:p>You have the right, but are not required, to use the services of a public adjuster in the preparation and handling of your insurance claim.</html:p>
<html:p>Public adjusters cannot solicit your business while the loss is underway, or between the hours of 6 p.m. and 8 a.m.</html:p>
<html:p>Your “Public Adjuster Contract,” with a public adjuster representing you, should clearly indicate the amount of the fee you will be paying to your public adjuster. Your contract, with this fee percentage, should be acknowledged by your initials on the “Public Adjuster Contract.” The salary, fee,
commission, or other consideration is to be paid by you (the insured), not the insurance company (insurer).</html:p>
<html:p>You have the right to cancel the contract with your public adjuster, without any penalty or obligation, within three business days from the date the contract is signed. If the contract was established from a catastrophic disaster as defined in subdivision (c) of Section 15001, the insured has the right to cancel within five calendar days.</html:p>
<html:p>If you cancel the contract with your public adjuster, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.</html:p>
<html:p>To cancel the contract with your public adjuster, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed
and dated copy of the cancellation notice, or any other written notice, or send a telegram to the public adjuster at the address in the contract.</html:p>
<html:p>You have the right to, and may, communicate with your insurance company at any time if you feel the need during the claims process.</html:p>
<html:p>
If you have any concerns or questions, the officers at the California Department of Insurance Consumer Hotline are there to help you. Please contact them at 1-800-927-HELP (4357) or www.insurance.ca.gov.”
<html:br/>
</html:p>
<html:br/>
<html:p>
(w)
<html:span class="EnSpace"/>
No later than three business days after the cancellation has expired, the public adjuster shall notify the insurer, its adjuster, or its attorney, that he or she has entered into a written contract with the insured.
</html:p>
<html:p>
(x)
<html:span class="EnSpace"/>
If the licensee misrepresents or conceals a material
fact from the insured prior to execution of the contract, the insured is entitled to rescind the contract without time limit.
</html:p>
<html:p>
(y)
<html:span class="EnSpace"/>
Notwithstanding any other provision of this section, if a property loss is included in an area that is subject to a catastrophic disaster, as defined in Section 15001, the insured shall have the right to cancel a contract with a public adjuster within five calendar days of signing it and being provided a copy of the signed contract.
</html:p>
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</ns0:BillSection>
<ns0:BillSection id="id_2B78F757-0F15-42B4-8E07-7328A6CB314E">
<ns0:Num>SEC. 31.</ns0:Num>
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Section 15028.7 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:LawSection id="id_B628F5AB-014C-48EF-A14E-F684A4F724D6">
<ns0:Num>15028.7.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
A public adjuster who receives, accepts, or holds any funds on behalf of an insured towards the settlement of a claim for loss or damage shall deposit the funds in a non-interest-bearing escrow or trust account in a financial institution that is insured by an agency of the federal government in the adjuster’s home state or the state where the loss occurred.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
All funds held in an escrow or trust account shall be the property of the insured and shall be held pursuant to a written contract signed by the insured and the public adjuster.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
A public adjuster who receives any fiduciary funds shall, within 15
calendar days of receipt, deposit the funds in the escrow account and provide a written statement to the insured showing the amount of funds received and deposited in that account. If the fiduciary funds relate to a claim for loss or damage in an area that is or was subject to a catastrophic disaster, as defined in Section 15001, or a state of emergency or a local emergency, as those terms are defined in Section 8558 of the Government Code, the fiduciary funds shall be deposited in the escrow or trust account within seven calendar days of receipt.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
A public adjuster who, after reasonable diligence, is unable to obtain the endorsements of all payees designated on any bank draft representing fiduciary
funds, or who receives a written statement from the insured indicating that he or she does not wish to establish an escrow or trust account, shall be exempt from the requirements of subdivisions (a) to (c), inclusive.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The endorsement by a payee designated on any bank draft representing fiduciary funds shall not be construed as a waiver of any potential right of the payee to dispute the public adjuster’s entitlement to those funds or any portion thereof.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A public adjuster shall, within 30 calendar days of receipt, remit to the insured any funds received towards the settlement of a claim for loss or damage.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If the funds towards a settlement from a claim for loss or damage relate in an area that is or was subject to a catastrophic disaster, as defined in Section 15001, or a state of emergency or a local emergency, as those terms are defined in Section 8558 of the Government Code, the funds shall be remitted to the insured within 15 calendar days of receipt.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_758BCE95-5DA4-440D-89DE-96324C505562">
<ns0:Num>SEC. 32.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:INS:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'15029.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 15029 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is amended to read:
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<ns0:Fragment>
<ns0:LawSection id="id_2F7FD22C-AD71-4C46-976B-CFE4C87B0A43">
<ns0:Num>15029.</ns0:Num>
<ns0:LawSectionVersion id="id_E20A8CD4-93A8-41A1-9017-34854A838973">
<ns0:Content>
<html:p>A person shall not concurrently hold a license or registration or engage in business regulated by this chapter and the provisions of Chapter 1 (commencing with Section 14000).</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_9CB06C26-4CBE-49B9-95F5-D57BEC4F4B45">
<ns0:Num>SEC. 33.</ns0:Num>
<ns0:Content>
<html:p>
No reimbursement is required by this act pursuant to Section 6 of Article XIII
<html:span class="ThinSpace"/>
B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII
<html:span class="ThinSpace"/>
B of the California Constitution.
</html:p>
</ns0:Content>
</ns0:BillSection>
</ns0:Bill>
</ns0:MeasureDoc>