Bill Text: CA AB2782 | 2009-2010 | Regular Session | Chaptered
Bill Title: Insurance omnibus.
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Passed) 2010-09-27 - Chaptered by Secretary of State - Chapter 400, Statutes of 2010. [AB2782 Detail]
Download: California-2009-AB2782-Chaptered.html
BILL NUMBER: AB 2782 CHAPTERED
BILL TEXT
CHAPTER 400
FILED WITH SECRETARY OF STATE SEPTEMBER 27, 2010
APPROVED BY GOVERNOR SEPTEMBER 25, 2010
PASSED THE SENATE AUGUST 23, 2010
PASSED THE ASSEMBLY AUGUST 24, 2010
AMENDED IN SENATE AUGUST 17, 2010
AMENDED IN SENATE MAY 28, 2010
AMENDED IN ASSEMBLY MAY 10, 2010
AMENDED IN ASSEMBLY APRIL 22, 2010
AMENDED IN ASSEMBLY APRIL 5, 2010
INTRODUCED BY Committee on Insurance (Solorio (Chair), Bradford,
Carter, Feuer, Hayashi, Nava, and Torres)
MARCH 3, 2010
An act to amend Sections 31, 33, 34, 674.9, 1192.9, 1621, 1623,
1625, 1637, 1639, 1729, 1749, 1749.3, 1758.96, 1758.992, 1802.1,
1807.5, 1807.7, 1808, 1810.7, 1811, 1871.7, 1874.86, 12962, 14090,
14090.1, 15054, and 15059.1 of, to add Sections 1742.3, 1807.8, and
1807.9 to, and to repeal Section 1673 of, the Insurance Code,
relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2782, Committee on Insurance. Insurance omnibus.
(1) Existing law prohibits insurance agents, insurance brokers,
and insurance solicitors from transacting in life insurance.
This bill would also prohibit insurance agents, insurance brokers,
and insurance solicitors from transacting in disability insurance,
health insurance, and 24-hour care coverage.
(2) Existing law requires each insurer writing liability insurance
for long-term health care facilities, residential care facilities
for the elderly, or physicians who provide or oversee the provision
of services to residents in long-term health care facilities or
residential care facilities for the elderly to report to the
Insurance Commissioner specified information regarding liability
policies for those facilities or physicians by a date to be set by
the commissioner, but not later than July 1 of each calendar year.
This bill would instead require the report by a date set by the
commissioner without restriction, except that the report shall be
required not more than once each calendar year.
(3) Existing law authorizes a domestic insurer to make excess
funds investments in shares of an investment company, as defined, if
certain requirements are satisfied. Among those requirements is the
requirement that the investment company be domiciled in the United
States with all assets held in the United States by a bank, trust
company, or other authorized custodian chartered by the United
States, its territories, possessions, or states. Existing law also
requires that, in order for a domestic insurer to make excess funds
investments in an investment company, the investment company issue
its shares to the insurer or to the insurer's custodian,
subcustodian, or depository designated pursuant to certain
provisions, or have its shares be retained by a bank, trust company,
or other entity other than the investment company that is authorized
by the United States to act as a transfer and dividend paying agent
for the investment company.
This bill would still require that an investment company in which
a domestic insurer may make excess funds investments be domiciled in
the United States, but would delete the requirements that all assets
be held in the United States by a bank, trust company, or other
authorized custodian chartered by the United States, its territories,
possessions, or states. The bill would also provide that specified
laws that generally relate to an insurer's custodians, subcustodians,
or depositories are not applicable to assets or investments held by
an investment company in which a domestic insurer may make excess
funds investments.
(4) Existing law provides that a fire and casualty licensee is a
person authorized to act as an insurance agent, broker, or solicitor,
and a fire and casualty broker-agent license is a license to make
those insurance transactions. A fire and casualty licensee is
authorized to transact 24-hour care coverage and any coverage that a
personal lines licensee is authorized to transact.
This bill would delete the authorization of a fire and casualty
licensee to transact 24-hour care coverage and any coverage that a
personal lines licensee is authorized to transact. This bill would
divide the fire and casualty broker-agent license into 2 insurance
license types: property broker-agent licenses, for insurance coverage
on the direct or consequential loss or damage to property of every
kind, and casualty broker-agent licenses, for insurance coverage
against legal liability, including for death, injury, disability, or
damage to real or personal property.
(5) Existing law requires a minimum of 40 hours of prelicensing
study as a prerequisite to qualification for a fire and casualty
broker-agent license.
This bill would require a minimum of 20 hours of prelicensing
study as a prerequisite to qualification for a property broker-agent
license, and a minimum of 20 hours of prelicensing study as a
prerequisite to qualification for a casualty broker-agent license.
(6) Existing law requires a fire and casualty broker-agent to
complete an annual minimum of 25 hours of continuing education for
the first 4 years of his or her licensing, and after 4 years the
licensee is required to complete a minimum of 24 hours of continuing
education prior to license renewal, every 2 years.
This bill would instead require the property or casualty
broker-agent to complete 24 hours of continuing education prior to
license renewal.
(7) Existing law authorizes a person licensed as a fire and
casualty broker-agent or a life licensee to transact disability
insurance on behalf of an insurer which is authorized to transact
disability insurance by filing a notice of appointment for that
purpose.
This bill would delete that provision.
(8) Existing law authorizes the Insurance Commissioner, where a
licensee has been found by the commissioner to have violated any
provision of the code that would justify the suspension or revocation
of a license held, or where a person is applying for a license and
there exists grounds for the denial of the application by the
commissioner, after a hearing, to revoke the license held or deny the
application for an unrestricted license, and in lieu of an
unrestricted license issue a restricted license.
This bill would authorize the commissioner, without a hearing, to
issue an order denying an application by a business entity for an
unrestricted license and granting instead a restricted license. The
bill would also authorize this action by the commissioner where a
controlling person of the business entity, as defined, holds a
restricted license. The bill would provide for a means by which the
business entity would be authorized to request reconsideration of the
commissioner's decision. The bill would require that, if the
commissioner determines that the business entity should have been
granted an unrestricted license, the unrestricted license be granted
retroactively.
(9) Existing law authorizes licensed insurance agents, insurance
brokers, and credit insurance agents to act as credit insurance
agents for an authorized insurer with respect to certain kinds of
insurance sold in connection with and incidental to a loan or other
extension of credit, as specified.
This bill would include in the definition of credit insurance
guaranteed automobile protection insurance, as defined, and any other
form of insurance declared by the commissioner to be credit
insurance.
(10) Existing law requires an insurer not to execute an
undertaking of bail except by and through a person holding a bail
license issued by the commissioner. Bail licenses are renewable
annually by way of a notice of intention to keep licenses in force or
applications for renewal of licenses filed on or before June 30 of
each year.
This bill would, commencing January 1, 2011, delete the notice of
intention to keep licenses in force as a renewal method, and make
bail licenses renewable every 2 years, as prescribed.
(11) Existing law makes it unlawful to knowingly employ runners,
cappers, steerers, or other persons to procure clients or patients to
perform or obtain services or workers' compensation benefits 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 his or her insurer. The commissioner
is authorized to bring a civil action against any person violating
this provision and, on and after January 1, 2006, and prior to
January 1, 2011, if the commissioner has brought an action or has
proceeded with an action brought by another person under this
provision, the commissioner is entitled to attorney's fees and costs
in addition to any judgment.
This bill would delete the January 1, 2011, repeal date for the
attorney's fees and costs provision.
(12) Existing law requires each insurer that issues automobile
liability or collision policies to report annually to the Department
of Insurance regarding the number of vehicles inspected for which it
has approved a claim for the cost of auto body repairs, the
percentage that number represents of the total number of vehicles for
which it paid an auto body repair claim in the prior calendar year,
and the results of the inspection, including any fraud uncovered and
whether any legal action was pursued.
This bill would change the reporting requirement so that the
report need only be submitted at the request of the commissioner and
not more than annually.
(13) Existing law requires the commissioner to report annually to
the Governor, the Legislature, and the committees of the Senate and
Assembly having jurisdiction over insurance an analysis of specified
information.
This bill would eliminate the requirement for the report to
include an analysis of the results of a program to reduce the number
of uninsured motorists and the relationship to affordable private
passenger vehicle liability insurance rates.
(14) Existing law requires that insurance adjusters and public
insurance adjusters be licensed by the commissioner. Adjuster
licenses expire on May 31 of each even-numbered year. Licensees are
required, if not exempt, to complete a minimum of 24 hours of
continuing education, including ethics.
This bill would change the expiration of those licenses to the day
2 years after the last calendar day of the month in which the
initial license was issued. The bill would require licenses issued
prior to January 1, 2011, to expire on May 31 of each even-numbered
year. The bill also would require that 3 hours of the continuing
education requirement consist of ethics.
(15) This bill would make minor, conforming, and related changes
and delete obsolete provisions.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 31 of the Insurance Code is amended to read:
31. "Insurance agent" means a person authorized, by and on behalf
of an insurer, to transact all classes of insurance other than life,
disability, or health insurance, on behalf of an admitted insurance
company.
SEC. 2. Section 33 of the Insurance Code is amended to read:
33. "Insurance broker" means a person who, for compensation and
on behalf of another person, transacts insurance other than life,
disability, or health with, but not on behalf of, an insurer.
SEC. 3. Section 34 of the Insurance Code is amended to read:
34. "Insurance solicitor" means a natural person employed to aid
a property and casualty broker-agent acting as an insurance agent or
insurance broker in transacting insurance other than life,
disability, or health.
SEC. 4. Section 674.9 of the Insurance Code is amended to read:
674.9. (a) Notwithstanding subdivision (b) of Section 674.6, an
insurer issuing policies of liability insurance to long-term health
care facilities, residential care facilities for the elderly, or
physicians who provide or oversee the provision of services to
residents in long-term health care facilities or residential care
facilities for the elderly shall notify the department at least 90
days prior to the date it intends to cease, withdraw, or
substantially withdraw from offering liability policies to those
facilities or physicians.
(b) Each insurer writing liability insurance for long-term health
care facilities, residential care facilities for the elderly, or
physicians who provide or oversee the provision of services to
residents in long-term health care facilities or residential care
facilities for the elderly shall, by a date to be set by the
commissioner, but not more than once each calendar year, report to
the commissioner information specified by him or her regarding
liability policies for those facilities or physicians. The
information shall include, but not be limited to, the following:
(1) Whether the insurer is writing coverage for long-term health
care facilities, residential care facilities for the elderly, or
physicians who provide or oversee the provision of services to
residents in long-term health care facilities or residential care
facilities for the elderly, including new and renewal policies, and
the types of policies it is writing.
(2) The number and types of long-term health care facilities or
residential care facilities for the elderly and beds covered.
(3) The total amount of premiums from insureds, both written and
earned, during the immediately preceding five calendar years.
(4) The total number of claims received, including the amount per
claim.
(5) The number of claims incurred, together with the monetary
amount reserved for loss and defense and cost containment expense for
the immediately preceding accident year or report year.
(6) The number of claims closed with payment during the
immediately preceding five calendar years, the total monetary amount
paid for loss thereon, reported by the year the claim was incurred,
and the total defense and cost containment expense paid thereon,
reported by the year the claim was incurred.
(7) The monetary amount paid on claims, including the amount paid
per claim, during the immediately preceding five calendar years to be
reported separately by the year the claim was incurred, with defense
and cost containment expense paid.
(8) The number of claims closed without payment during the
immediately preceding five calendar years, reported by the year the
claim was incurred, and the defense and cost containment expense paid
thereon.
(9) The monetary amount reserved in the annual statement for loss
and defense and cost containment expense for the immediately
preceding calendar year for outstanding claims incurred but not
reported to the insurer.
(10) The number and types of lawsuits filed against the insureds
in the immediately preceding calendar year.
(11) Annualized information on investment income or loss, that
shall be consistent with the reported information provided by
insurers to the National Association of Insurance Commissioners.
(c) For the purposes of information collection conducted pursuant
to this section, first priority shall be given by the department and
commissioner to collecting and compiling information from insurers
concerning long-term health care facilities and physicians providing
services in those facilities, and, to the extent that departmental
resources allow, secondary priority shall then be given to the
collecting and compiling of information concerning residential care
facilities for the elderly and the physicians who provide services in
those facilities.
(d) Information that is collected for long-term health care
facilities and the physicians for those facilities shall be
collected, maintained, analyzed, and reported separately from
information that is collected, maintained, analyzed, and reported
concerning residential care facilities for the elderly, and the
physicians for those facilities.
(e) As used in this section, "long-term health care facility" has
the same meaning as that term is defined in Section 1418 of the
Health and Safety Code.
(f) As used in this section, "residential care facilities for the
elderly" has the same meaning as that term is defined in Section
1569.2 of the Health and Safety Code.
(g) Information collected by the department pursuant to this
section shall be deemed official information and subject to the
disclosure protections of Section 1040 of the Evidence Code. Nothing
in this section shall require individualized information that would
identify the amount paid by a specific insurer or facility to be
released. However, nothing in this subdivision shall prevent the
department from preparing reports and policy recommendations based on
the data collected pursuant to this section.
SEC. 5. Section 1192.9 of the Insurance Code is amended to read:
1192.9. Notwithstanding Section 1100, a domestic insurer may make
excess funds investments in shares of an investment company, as
defined in the Federal Investment Company Act of 1940, if the
requirements of subdivisions (b) and (c) are satisfied. No investment
made pursuant to this section that ceases to satisfy the
requirements of subdivision (b) or (c) shall be retained as an excess
fund investment. No domestic insurer shall invest under any
provision of this code in the shares of any investment company that
has more than 33.33 percent of its investments in foreign investments
that do not comply with paragraph (4) of subdivision (b).
(a) The definitions in this subdivision apply to the following
terms when used in this section:
(1) A mutual fund is an open-end management company as defined in
Section 5(a)(1) of the Federal Investment Company Act of 1940 (15
U.S.C. Sec. 80(a)-5(a)(1)).
(2) An exchange traded fund is either an open-end management
company as defined in Section 5(a)(1) of the Federal Investment
Company Act of 1940, or a unit investment trust as defined in Section
4(2) of the Federal Investment Company Act of 1940 (15 U.S.C. Sec.
80a-4(2)), that is registered under the Federal Investment Company
Act of 1940 and that satisfies the terms of exemptive orders issued
by the United States Securities and Exchange Commission that qualify
it to be an exchange-traded fund.
(3) A fund is any investment company authorized in this section as
an excess fund investment.
(b) The investment company shall:
(1) Be registered with and reporting to the United States
Securities and Exchange Commission.
(2) Be domiciled in the United States.
(3) Have assets in excess of one hundred million dollars
($100,000,000), or be affiliated with other investment companies that
have, in the aggregate, assets in excess of one billion dollars
($1,000,000,000).
(4) Have at least 66.67 percent of its investments be investments
that are authorized under Article 3 (commencing with Section 1170)
and Article 4 (commencing with Section 1190), except that any amount
of a fund's assets may consist of foreign investments, provided that
if more than 50 percent of its total investments consist of foreign
investments, then the insurer's investment in that fund shall comply
with the provisions of subparagraph (C) of paragraph (1) of
subdivision (c), notwithstanding any other provision of this section
or this code.
(5) Have at least 36 months of active investment history.
(6) Issue its shares as fully paid and nonassessable, with no
preemptive, conversion, or exchange rights.
(7) Issue its shares to the insurer or to the insurer's custodian,
subcustodian, or depository designated pursuant to Section 1104.9,
or have its shares be retained by a bank, trust company, or other
entity other than the investment company that is authorized by the
United States to act as a transfer and dividend paying agent for the
investment company, provided that, notwithstanding any other
provision of this code, Section 1104.9 shall not apply to the assets
or investments held by the investment company.
(8) Provide equal rights and privileges to each share within the
same class or series, and entitle each share within its class or
series to vote and to participate equally in dividends and
distributions declared by the investment company and in the net
distributable assets of the investment company on liquidation.
(9) If it is a mutual fund, entitle shareholders to require the
investment company to redeem all shares.
(10) If it is an exchange-traded fund, all of its shares are both
of the following:
(A) Registered under the Federal Securities Act of 1933.
(B) Either listed and traded on a national securities exchange
registered under the Securities Exchange Act of 1934 or have prices
ascertained by quotations furnished through a nationwide automated
quotations system approved by the Financial Industry Regulatory
Authority.
(11) Have no investment policies that authorize any of the
following:
(A) Borrowings to exceed 331/3 percent of its total assets.
(B) The aggregate notional value of its derivative instruments
outstanding to exceed 10 percent of its total assets.
(C) Investment in commodities or direct ownership of real estate.
(12) Have an expense ratio that does not exceed the following
amounts of its average daily net asset values:
(A) For a money market fund, 100 basis points.
(B) For a bond fund, 200 basis points.
(C) For a stock or mixed stock/bond fund, 300 basis points.
(c) An insurer shall do the following:
(1) At no time make or retain an excess fund investment under the
authority of this section that exceeds the following limits:
(A) An amount of its admitted assets, as reported in its most
recent annual statement, that is more than any of the following:
(i) Three percent in a single investment company or 7 percent in
an affiliated group of investment companies.
(ii) Twenty-five percent in all investments authorized by this
section.
(B) One hundred percent of its surplus as regards policyholders,
as reported in its most recent annual statement, in all investments
authorized by this section.
(C) For an investment in a fund that has more than 50 percent of
its assets in foreign investments, those foreign investments shall be
foreign investments as defined by Section 1240 and shall be
considered foreign investments, investments denominated in foreign
currencies, or both, as applicable, for purposes of the limitations
set forth in subdivisions (a) and (b) of Section 1241. No insurer
shall invest in any such fund pursuant to any other provision of this
code.
(D) An investment in any single investment company that exceeds 10
percent of the total net asset value of that investment company.
(2) Make a specific determination, pursuant to Sections 1200 and
1201, that an investment company has stated investment policies that
are suitable for the insurer's investment objectives.
(d) In addition to any other remedies available under this code
for any violation of this section, the commissioner may, after giving
an insurer notice and an opportunity to be heard, deny credit in any
financial statement filed with the commissioner for all or any part
of an investment in an investment company, even if it otherwise
complies with this section, if he or she finds the investment to be
unsound or hazardous.
The grounds for finding an investment unsound or hazardous may
include, but are not limited to, the following determinations:
(1) The investment company's investment adviser or subadviser
lacks sufficient investment experience to render reliable investment
advice; or lacks good professional character or good standing with
any securities licensing authorities having jurisdiction over them.
(2) The portfolio turnover rate of the investment company is
excessive in relation to its investment goals.
(3) The investment company's annual investment management fee, or
other fees or charges incurred by the investment company or the
insurer, are not reasonable when compared to charges or fees
associated with similar investment companies.
(4) An investment company fails to mirror substantially any
security index upon which its stated investment policy is based.
SEC. 6. Section 1621 of the Insurance Code is amended to read:
1621. An insurance agent is a person who transacts insurance,
other than life, disability, or health insurance, on behalf of an
admitted insurance company. The term "insurance agent" as used in
this chapter does not include a life agent as defined in this
article.
SEC. 7. Section 1623 of the Insurance Code is amended to read:
1623. (a) An insurance broker is a person who, for compensation
and on behalf of another person, transacts insurance other than life,
disability, or health insurance with, but not on behalf of, an
admitted insurer. It shall be presumed that the person is acting as
an insurance broker if the person is licensed to act as an insurance
broker, maintains the bond required by this chapter, and discloses,
in a written agreement signed by the consumer, all of the following:
(1) That the person is transacting insurance on behalf of the
consumer.
(2) A description of the basic services the person will perform as
a broker.
(3) The amount of all broker fees being charged by the person.
(4) If applicable, the fact that the person may be entitled to
receive compensation from the insurer, directly or indirectly, for
the consumer's purchase of insurance as a consequence of the
transaction.
(b) If a transaction involves both a retail broker and a wholesale
intermediary broker, the wholesale intermediary broker shall be
deemed to have satisfied its disclosure obligations under this
section if it provides written disclosure to the retail broker of the
criteria set forth in paragraphs (2), (3), and (4) of subdivision
(a).
(c) The presumption of broker status is rebutted as to any
transaction in the admitted market in which any of the following is
present:
(1) The licensee is appointed, pursuant to Section 1704, as an
agent of the insurer for the particular class or type of insurance
being transacted.
(2) The licensee has a written agreement with an insurer
containing express terms that authorize the licensee to obligate the
insurer without first obtaining notification from the insurer that
the insurer has accepted, conditionally or unconditionally, the
submitted risk.
(3) The licensee is authorized, pursuant to a written agreement
with an insurer, to appoint other licensees as agents of the insurer,
pursuant to Section 1704.
(4) The licensee is authorized, pursuant to a written agreement
with an insurer, to pay claims on behalf of the insurer.
(d) In all other cases, the presumption of broker status is
rebutted based on the totality of the circumstances indicating that
the broker-agent is acting on behalf of the insurer.
(e) For purposes of this section, "totality of the circumstances"
means evidence indicating whether a broker-agent was acting on behalf
of the insurer or was acting on behalf of a third person. In
determining the totality of circumstances, all relevant facts and
circumstances shall be reviewed and the review is not limited to any
particular fact or factors and this section does not require that any
particular circumstance receive greater or lesser weight.
SEC. 8. Section 1625 of the Insurance Code is amended to read:
1625. (a) A fire and casualty licensee is a person authorized to
act as an insurance agent, broker, or solicitor, and a fire and
casualty broker-agent license is a license so to act.
(b) Licenses to act as a fire and casualty broker-agent under this
chapter shall be of the following types:
(1) Property, which shall entitle the licensee to transact
insurance coverage on the direct or consequential loss or damage to
property of every kind.
(2) Casualty, which shall entitle the licensee to transact
insurance coverage against legal liability, including that for death,
injury, disability, or damage to real or personal property.
SEC. 9. Section 1637 of the Insurance Code is amended to read:
1637. An organization may hold any license or licenses necessary
to act in the following capacities under this chapter and no others:
(a) A license to act as a life-only agent.
(b) A license to act as an accident and health agent.
(c) A license to act as a property broker-agent.
(d) A license to act as a casualty broker-agent.
(e) A license to act as a cargo shipper's agent.
(f) A license to act as a personal lines licensee.
(g) A license to act as a credit insurance agent.
(h) A license to act as a rental car agent.
(i) A nonresident license to act as a limited lines licensee
pursuant to subdivision (i) of Section 1639.
(j) A license to act as a self-service storage agent.
(k) A license to act as a limited lines automobile insurance
agent.
SEC. 10. Section 1639 of the Insurance Code is amended to read:
1639. The following types of licenses under this chapter may be
issued to nonresidents:
(a) A property broker-agent or a casualty broker-agent if the
nonresident is duly licensed to transact those lines of insurance
described in Section 1625, under the laws of the state, territory of
the United States, or province of Canada where the resident license
is maintained.
(b) A personal lines broker-agent if the nonresident is duly
licensed to transact those lines of insurance described in Section
1625.5, under the laws of the state, territory of the United States,
or province of Canada where the resident license is maintained.
(c) A life-only agent or an accident and health agent if the
nonresident possesses a resident license in another state, territory
of the United States, or province of Canada to transact life
insurance or disability insurance.
(d) A nonresident life-only agent may be granted authority to
transact variable contracts if he or she has been granted that
authority by the state where the resident license is maintained.
(e) A surplus line broker and a special lines surplus broker if
the nonresident holds that type of license in the state or territory
of the United States where the resident license is maintained.
(f) A credit insurance agent if the nonresident holds that type of
license in the state, territory of the United States, or province of
Canada where the resident license is maintained.
(g) A rental car agent if the nonresident holds that type of
license in the state, territory of the United States, or province of
Canada where the resident license is maintained.
(h) A cargo shipper's agent if the nonresident holds that type of
license in the state, territory of the United States, or province of
Canada where the resident license is maintained.
(i) A limited lines license if the nonresident holds that type of
license in the state, territory of the United States, or province of
Canada where the resident license is maintained. As used in this
section, "limited lines license" means any authority granted by the
resident state that restricts the authority of the license to less
than the total authority granted by any of the types of licenses
identified in this section.
(j) A self-service storage agent if the nonresident holds that
type of license in the state, territory of the United States, or
province of Canada where the resident license is maintained.
SEC. 11. Section 1673 of the Insurance Code is repealed.
SEC. 12. Section 1729 of the Insurance Code is amended to read:
1729. Every licensee and every applicant for a license shall
immediately notify the commissioner using an electronic service
approved by the commissioner of any change in his or her e-mail,
residence, principal business, or mailing address as given to the
commissioner pursuant to Sections 1658 and 1728.
SEC. 13. Section 1742.3 is added to the Insurance Code, to read:
1742.3. (a) The commissioner may, without hearing, issue an order
denying an application by a business entity for an unrestricted
license and granting instead a restricted license. The commissioner
may do so when a controlling person of the business entity, as
defined in subdivision (b) of Section 1668.5, holds a restricted
license. The commissioner may impose any reasonable restriction on
the business entity's authority to transact insurance that is similar
or related to the restriction imposed upon the controlling person. A
description of the nature and scope of the restriction imposed upon
the business entity shall be included in the commissioner's order.
The business entity shall have no property right in the restricted
license and the commissioner may, with or without hearing or cause,
suspend or revoke the restricted license. The restricted license
shall be issued in the normal course of business following the
issuance of the order and shall remain in effect pending the outcome
of any request for reconsideration and any decision following a
hearing pursuant to that request.
(b) The business entity may request reconsideration of the
commissioner's decision to deny an unrestricted license within 30
days from the date that the decision is mailed to the entity. If the
business entity requests a hearing on the request for
reconsideration, the hearing shall be conducted pursuant to Article
10 (commencing with Section 11445.10) of Chapter 4.5 of Part 1 of
Division 3 of Title 2 of the Government Code, and the business entity
shall bear the burden of proving by clear and convincing evidence
that an unrestricted license should have been granted instead of a
restricted license. If the commissioner determines, after a hearing,
that the business entity should have been granted an unrestricted
license, the entity shall be granted that unrestricted license
retroactive to the date of the granting of the restricted license.
SEC. 14. Section 1749 of the Insurance Code is amended to read:
1749. The department shall require all new applicants for license
as a property broker-agent, casualty broker-agent, limited lines
automobile insurance agent, personal lines broker-agent, life-only
agent, or accident and health agent to meet prelicensing education
standards as follows:
(a) Require a minimum of 20 hours of prelicensing study as a
prerequisite to qualification for a property broker-agent license.
The curriculum for satisfying this requirement shall be approved by
the curriculum board and submitted to the commissioner for final
approval. Any additions to the minimum requirements provided by this
section shall be approved by the curriculum board pursuant to Section
1749.1 and certified by the department.
(b) Require a minimum of 20 hours of prelicensing study as a
prerequisite to qualification for a casualty broker-agent license.
The curriculum for satisfying this requirement shall be approved by
the curriculum board and submitted to the commissioner for final
approval. Any additions to the minimum requirements provided by this
section shall be approved by the curriculum board pursuant to Section
1749.1 and certified by the department.
(c) Require a minimum of 20 hours of prelicensing study as a
prerequisite for qualification for a personal lines broker-agent
license. The curriculum for satisfying this requirement shall be
approved by the curriculum board and submitted to the commissioner
for final approval. Any additions to the minimum requirements
provided by this section shall be approved by the curriculum board
pursuant to Section 1749.1 and certified by the department.
(d) Require a minimum of 20 hours of prelicensing study as a
prerequisite for qualification for a life-only agent license. The
curriculum for satisfying this requirement shall be approved by the
curriculum board and submitted to the commissioner for final
approval. Any additions to the minimum requirements provided by this
section shall be approved by the curriculum board pursuant to Section
1749.1 and certified by the department.
(e) Require a minimum of 20 hours of prelicensing study as a
prerequisite for qualification for a limited lines automobile
insurance agent license. The curriculum for satisfying this
requirement shall be approved by the curriculum board and submitted
to the commissioner for final approval. Any additions to the minimum
requirements under this section shall be approved by the curriculum
board pursuant to Section 1749.1 and certified by the department.
(f) Require a minimum of 20 hours of prelicensing study as a
prerequisite for qualification for an accident and health insurance
agent license. The curriculum for satisfying this requirement shall
be approved by the curriculum board and submitted to the commissioner
for final approval. Any additions to the minimum requirements under
this section shall be approved by the curriculum board pursuant to
Section 1749.1 and certified by the department. This curriculum shall
also include instruction in workers' compensation and general
principles of employers' liability.
(g) In addition to the 20 hours of prelicensing education required
to qualify for a license as a property broker-agent, casualty
broker-agent, personal lines broker-agent, a life-only agent, or an
accident and health agent, or the 20 hours of prelicensing education
required to qualify for a license as a limited lines automobile
insurance agent, the department shall require 12 hours of study on
ethics and this code. Where an applicant seeks a license for more
than one of the following license types: a fire and casualty
broker-agent license, a personal lines broker-agent license, a
life-only license, or an accident and health license, the applicant
shall only be required
to complete one 12-hour course on ethics and this code. The
curriculum for satisfying this requirement shall be approved by the
curriculum board and submitted to the commissioner for final
approval.
(h) An applicant for a life-only agent license, an accident and
health license, a personal lines broker-agent license, or a limited
lines automobile insurance agent license, who is currently licensed
as a nonresident in this state shall be required to complete only the
course of study on ethics and this code, as required by this
section. Additionally, any applicant for that license holding one or
more of the designations specified in subdivisions (a) to (p),
inclusive, of Section 1749.4 shall be exempted from any requirement
for courses in general insurance that would otherwise be a condition
of issuance of the license.
(i) An applicant for a property broker-agent or casualty
broker-agent license who is currently licensed as a nonresident in
this state shall be required to complete only the course of study on
ethics and this code, as required by subdivision (g). Additionally,
any applicant for a license holding one or more of the designations
specified in subdivisions (a) to (p), inclusive, of Section 1749.4,
shall be exempted from any requirement for courses in general
insurance that would otherwise be a condition of issuance of a
license.
(j) An applicant for a property broker-agent or casualty
broker-agent license or both who is licensed as a personal lines
agent shall complete a minimum of 20 hours of prelicensing study as a
prerequisite for each of these licenses. The curriculum for
satisfying this requirement shall be approved by the curriculum board
and submitted to the commissioner for final approval. The applicant
shall not be required to repeat any prelicensing requirements
completed as a prerequisite to being licensed as a personal lines
agent.
(k) Review and approval of prelicensing courses not conducted in a
classroom, as referenced in subdivisions (a) to (j), inclusive,
shall include an evaluation of the safeguards in place to ensure that
the student completing the course is the person enrolled in the
course, methods used to monitor the student's attendance are
adequate, methods for the student to interact with the entity
providing the training exist, and methods used to record the times
spent completing the course are adequate.
(l) Prelicensing certificates of completion expire three years
from the completion date of the course, whether or not a license is
issued.
SEC. 15. Section 1749.3 of the Insurance Code is amended to read:
1749.3. An individual licensed as a life-only agent or an
accident and health agent and also licensed as a property or casualty
broker-agent, or an individual only licensed as a property or
casualty broker-agent, shall complete those courses, programs of
instruction, or seminars approved by the commissioner for the type of
license held. Completion of specified product training required in
subdivision (d) of Section 1749.33, subdivision (b) of Section
1749.8, and paragraph (4) of subdivision (a) of Section 10234.93 may
result in the completion of more than the minimum of required
continuing education hours. The minimum number of hours required is
as follows:
(a) Any licensee, as specified in this section, shall
satisfactorily complete 24 hours of instruction prior to renewal of
the license. These hours of instruction may be completed at any time
prior to renewal of the license.
(b) An individual licensed as a property broker-agent or casualty
broker-agent and as a life-only agent or an accident and health agent
shall satisfy the requirements of this section by demonstrating
completion of the courses, programs of instruction, or seminars
approved by the commissioner for any of the license types listed in
this section.
(c) A licensee shall not be required to comply with the
requirements of this article if the licensee submits proof
satisfactory to the commissioner that he or she has been a licensee
in good standing for 30 continuous years in this state and is 70
years of age or older. This exemption shall not apply to those
individuals licensed for the first time on or after January 1, 2010.
SEC. 16. Section 1758.96 of the Insurance Code is amended to read:
1758.96. A person licensed pursuant to this article may act as a
credit insurance agent for an authorized insurer only with respect to
the kinds of insurance specified in this section sold in connection
with and incidental to a loan or other extension of credit other than
a loan in excess of sixty thousand dollars ($60,000) relating to or
secured by real property where the repayment period does not exceed
10 years. The sale of credit insurance products as specified in this
section in excess of sixty thousand dollars ($60,000) relating to or
secured by real property where any compensation, fee, or commission
is paid dependent on the placement of credit insurance, requires a
license to act as an insurance agent or life agent pursuant to
Section 1621 or 1622.
(a) Credit life insurance.
(b) Credit disability insurance.
(c) Credit involuntary unemployment insurance or credit
loss-of-income insurance.
(d) Credit property insurance.
(e) Guaranteed automobile protection (GAP) insurance.
(f) Any other form of insurance declared by the commissioner to be
subject to this section pursuant to subdivision (d) of Section
1758.992.
SEC. 17. Section 1758.992 of the Insurance Code is amended to
read:
1758.992. As used in this article, the following definitions have
the following meanings:
(a) "Enrollment" means the process of soliciting or accepting
enrollments or applications from a debtor under a credit insurance
policy, which includes informing the debtor of the availability of
coverage, calculating the insurance charge, preparing and delivering
the certificate of insurance or notice of proposed insurance,
answering questions regarding the coverage, or otherwise assisting
the debtor in making an informed decision whether or not to elect to
purchase credit insurance.
(b) "Creditor" means a lender of money or a vendor or lessor of
goods, services, property, rights, or privileges, for which payment
is arranged through a credit transaction, or any successor to the
right, title, or interest of that lender, vendor, or lessor, and any
affiliate, associate, subsidiary, subcontractor, director, officer,
or employee of any of them or any other person in any way associated
with any of them.
(c) "Credit insurance agent license" means an agent license issued
to an individual or organization for the enrollment and sale of
credit insurance.
(d) "Credit insurance" includes credit life insurance, credit
disability insurance, credit involuntary unemployment insurance,
credit loss-of-income insurance, credit property insurance, or
guaranteed automobile protection (GAP) insurance.
Credit insurance also includes any other form of insurance offered
in connection with an extension of credit that is limited to
partially or wholly extinguishing that credit obligation that the
commissioner determines should be designated a form of credit
insurance.
The commissioner may adopt, pursuant to Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code, reasonable rules and regulations necessary to carry
out this subdivision.
(e) (1) "Credit life insurance" means insurance on the life of a
debtor pursuant to or in connection with a specific loan or other
credit transaction, exclusive of any insurance procured at no expense
to the debtor. Insurance shall be deemed procured at no expense to
the debtor unless the cost of the credit transaction to the debtor
varies depending on whether or not the insurance is procured.
(2) "Credit disability insurance" means insurance on a debtor to
provide indemnity for payments becoming due on a specific loan or
other credit transaction while the debtor is disabled, as defined in
the policy, exclusive of any insurance procured at no expense to the
debtor. Insurance shall be deemed to have been procured at no expense
to the debtor unless the cost of the credit transaction to the
debtor varies depending on whether or not the insurance is procured.
(f) "Credit involuntary unemployment insurance" or "credit
loss-of-income insurance" means insurance issued to provide indemnity
for payments becoming due on a specific loan or other credit
transaction while the debtor is involuntarily unemployed, as defined
in the policy.
(g) "Credit property insurance" means insurance that provides
coverage (1) on personal property pledged or offered as collateral
for securing a personal or consumer loan, or (2) on personal property
purchased under an installment sales agreement or through a consumer
credit transaction, but does not include any insurance that provides
theft, collision, liability, property damage, or comprehensive
insurance coverage in any automobile or any other self-propelled
vehicle that is designed primarily for operation in the air or on the
highways, waterways, or sea, and its operating equipment, or that is
necessitated by reason of the liability imposed by law for damages
arising out of the ownership, operation, maintenance, or use of those
vehicles. However, that excluded insurance does include single
interest coverage on any of those vehicles that insures the interest
of the creditor in the same manner as collateral secures a loan.
(h) (1) "Guaranteed automobile protection" (GAP) insurance means
insurance in which a person agrees to indemnify a vehicle purchaser
or lessee for any of the difference between the actual cash value of
the insured's vehicle at the time of an unrecovered theft or total
loss and the amount owed on the vehicle pursuant to the terms of a
loan, lease agreement, or installment sales contract used to purchase
or lease the vehicle. GAP insurance may also include a promise to
pay up to five thousand dollars ($5,000) to an insured, in addition
to the sum needed to indemnify the insured for the difference between
the actual cash value and the outstanding debt, to purchase or lease
another vehicle.
(2) GAP insurance does not include, and no insurance license of
any type under this code is required to offer, any of the following:
(A) A promise contained in a conditional sales contract for the
sale of a vehicle by a licensed motor vehicle dealer or a promise
contained in a lease agreement for the lease of a vehicle by a
licensed motor vehicle dealer or leasing company to waive all or a
portion of the difference between the actual cash value of the
insured's vehicle at the time of an unrecovered theft or total loss
and the amount owed on the vehicle pursuant to the terms of a loan,
lease agreement, or installment sales contract used to purchase or
lease the vehicle.
(B) A promise by a lender as part of a debt obligation to purchase
or lease a vehicle in which the lender agrees to waive all or a
portion of the difference between the actual cash value of the
insured's vehicle at the time of an unrecovered theft or total loss
and the amount owed on the vehicle pursuant to the terms of a loan,
lease agreement, or installment sales contract used to purchase or
lease the vehicle.
(C) Coverage under subparagraphs (A) and (B) may not include a
promise to pay money to a vehicle purchaser or lessee in addition to
waiving the difference between the actual cash value and the amount
owed. For purposes of this paragraph, a promise to pay money does not
include, and a dealer shall be allowed to offer, a discount or
credit provided to a consumer as an incentive for purchasing or
leasing a new vehicle if the consumer is required to use the discount
or credit on a purchase or lease from the dealer that sold or leased
the original vehicle to the consumer.
SEC. 18. Section 1802.1 of the Insurance Code is amended to read:
1802.1. Every applicant for a license to act as a bail agent
shall file with the commissioner a notice of appointment executed by
a surety insurer or its authorized representative authorizing that
applicant to execute undertakings of bail and to solicit and
negotiate those undertakings on its behalf. Additional notices of
appointment may be filed by other surety insurers, upon the payment
for each additional notice of the fees specified in subdivision (a)
of Section 1811, before the license is issued and thereafter, as long
as the license remains in force. Each appointment shall, by its
terms, continue in force until any of the following occur:
(a) Termination of the bail agent's license.
(b) The end of the license term, if the fee provided in
subdivision (e) of Section 1811 for filing a renewal application is
not paid.
(c) The filing of a notice of termination by the insurer, its
representative, or by the bail agent.
SEC. 19. Section 1807.5 of the Insurance Code is amended to read:
1807.5. Except as provided in Sections 1669 and 1738, the
commissioner shall not suspend or revoke any license, issued under
this article, without first granting a hearing, upon reasonable
notice to the applicant, 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.
SEC. 20. Section 1807.7 of the Insurance Code is amended to read:
1807.7. Commencing on January 1, 2011, all licenses issued
pursuant to this article shall be for a license term of two years.
SEC. 21. Section 1807.8 is added to the Insurance Code, to read:
1807.8. "License term" as used in this chapter means all of that
two-year period beginning as described in subdivision (a) or (b) of
Section 1807.9, as applicable, and ending on the day two years after
the last calendar day of the month in which the initial license was
issued. Licenses issued prior to January 1, 2011, shall expire on
June 30 of each odd-numbered year.
SEC. 22. Section 1807.9 is added to the Insurance Code, to read:
1807.9. "License year" as used in this chapter shall be
determined for each individual and entity as follows:
(a) Upon initial licensing, the license year starts on the date
the license is issued.
(b) Subsequently, each license year starts the first day of the
month following the month in which the initial license was issued.
(c) A license year ends the following calendar year on the last
calendar day of the month in which the initial license was issued.
(d) A license year for licenses issued prior to January 1, 2011,
starts on July 1 and ends on June 30.
SEC. 23. Section 1808 of the Insurance Code is amended to read:
1808. (a) Applications for renewal of licenses may be filed on or
before the expiration date upon payment of the fees for filing
specified in Section 1811.
(b) Upon failure to file the application as provided in
subdivision (a), the license shall expire on the first day of the
next month, but the holder may file an application for a new license.
Until that same month and day of the next succeeding year the fee
shall be twice that specified in Section 1811 for the filing.
(c) No application shall be deemed filed within the meaning of
this section unless the document itself has been actually delivered
to, and the proper fee for its filing has been paid at, the office of
the commissioner during office hours, or unless both the document
and the fee have been filed and remitted pursuant to Sections 11002
and 11003 of the Government Code.
SEC. 24. Section 1810.7 of the Insurance Code is amended to read:
1810.7. (a) In order to be eligible to take the examination
required to be licensed under this chapter, the applicant shall have
completed not less than 12 hours of classroom education in subjects
pertinent to the duties and responsibilities of a bail licensee,
including, but not limited to, all related laws and regulations,
rights of the accused, ethics, and apprehension of bail fugitives.
Additionally, a licensee shall complete in each two-year license term
not less than 12 hours of continuing education in these subjects
prior to renewal of his or her license.
(b) The commissioner shall approve or disapprove an applicant to
provide education for licensure as required by this section within 90
days of receipt of the applicant's full and complete application.
However, this 90-day period shall be tolled during the pendency of
any investigation of the applicant by the commissioner for an alleged
violation that would, if proven, result in the suspension,
revocation, or denial of the provider's approval to provide
continuing education to bail agents as prescribed in Section 1813.
Failure to disapprove an applicant within this period shall result in
the automatic approval of the application. Approval shall be valid
for two years. The commissioner may, at any time, disapprove any
provider who is not qualified or whose course outlines are not
approved, who is not of good business reputation, or who is lacking
in integrity, honesty, or competency. A provider shall not provide
education for licensure following the expiration of the two-year
approval period unless the commissioner has renewed the provider's
approval. The commissioner shall, at the time of renewal, approve or
disapprove the course outlines and schedule of classes to be
provided.
(c) Providers responsible for providing education for licensure
under this chapter shall consult with the California State Sheriffs'
Association, the California District Attorneys Association, and the
County Counsels Association of California prior to submission of the
course outlines for approval by the commissioner, and these entities
may respond within 30 days of receipt of a request for consultation
from a provider. Providers shall maintain records of their requests
for consultation and any responses from these entities, and make
these records available to the department for review as requested.
The bail license fee shall be increased, the amount of which shall be
determined by the commissioner, which shall be deposited in the
Insurance Fund for the purposes of recovering the administrative
costs for meeting the conditions and purposes of this section.
Providers of education or continuing education shall offer courses to
all applicants at the same course fees.
(d) Any person who falsely represents to the commissioner that
compliance with this section has been met shall be subject, after
notice and hearing, to the penalties and fines set out in Section
1814.
(e) A licensee shall not be required to comply with the continuing
education requirements of this section if the licensee submits proof
satisfactory to the commissioner that he or she has been a licensee
in good standing for 30 continuous years in this state and is 70
years of age or older.
(f) The commissioner may make reasonable rules and regulations
necessary, advisable, and convenient for the administration and
enforcement of this chapter. The rules and regulations may include a
schedule establishing fees to be paid by an applicant seeking
approval to act as a provider and to deliver courses under this
section. Those fees shall be in an amount no greater than fees paid
by applicants providing similar courses to other insurance agents
licensed by the department, as specified in Section 1751.1.
(g) Nothing in this chapter shall preclude completion of the bail
agent continuing education requirements of this section through a
course of instruction offered via the Internet or correspondence.
However, this subdivision shall not be construed to allow completion
of the prelicensing education requirements of this section through a
course of instruction.
(h) Successful completion of the continuing education requirements
by means of an Internet or correspondence course shall require
obtaining a passing grade of at least 70 percent on a written final
examination. The final examination shall be open book and shall be
graded by the approved provider. The provider shall issue
certificates of completion only to those students who have passed the
final examination.
SEC. 25. Section 1811 of the Insurance Code is amended to read:
1811. For his services in connection with the filing of any
application or request for any license under this chapter, the
commissioner shall charge and collect the following fees:
(a) For filing an application or request for bail agent's license,
one hundred eighteen dollars ($118) per year.
(b) For filing an application or request for bail solicitor's
license, one hundred eighteen dollars ($118) per year.
(c) For filing an application or request for bail permittee's
license, two hundred thirty-six dollars ($236).
(d) For filing an application for examination, or reexamination,
twenty-four dollars ($24).
(e) For a renewal application, a fee of thirty-five dollars ($35)
per year. In the case of a bail agent with more than one valid notice
of appointment on file, the fee to be charged pursuant to this
subdivision shall be the fee provided herein multiplied by the number
of insurers whose valid appointments are on file at the date the
document is filed unless the bail agent in that document advises the
commissioner of his or her intent to terminate the appointment of one
or more of those insurers, in which event the fee shall be based
upon the number for insurers remaining.
(f) For a bail solicitor's renewal application, a fee of
thirty-five dollars ($35) per year.
(g) For a bail permittee's renewal application, a fee of one
hundred forty-eight dollars ($148) per year.
(h) At the time of filing an application for a license, if a
qualifying examination is required for issue or in connection with
the license, the fee for filing the first application to take the
qualifying examination shall be paid at the time of filing
application for the license.
(i) For filing application or request for approval of a true or
fictitious name pursuant to Section 1724.5, twelve dollars ($12),
except that there shall be no fee when the name is contained in an
original application.
(j) For filing a bond required by this chapter, except when the
bond constitutes part of an original application, ten dollars ($10).
(k) For filing a first amendment to an application, six dollars
($6).
( l ) For filing a second and each subsequent amendment
to an application, twelve dollars ($12).
SEC. 26. Section 1871.7 of the Insurance Code is amended to read:
1871.7. (a) 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 his or her insurer.
(b) 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.
(c) 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.
(d) 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 due to insufficient resources, then the commissioner may
proceed with the action.
(e) (1) 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, whichever is participating,
give written consent to the dismissal and their reasons for
consenting.
(2) 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, and shall not be served on the defendant until the
court so orders. The local district attorney or commissioner may
elect to intervene and proceed with the action within 60 days after
he or she 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.
(3) 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 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.
(4) Before the expiration of the 60-day period or any extensions
obtained under paragraph (3), the district attorney or commissioner
shall either:
(A) Proceed with the action, in which case the action shall be
conducted by the district attorney or commissioner.
(B) 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.
(5) 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.
(f) (1) If the district attorney or commissioner proceeds with the
action, he or she 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).
(2) (A) 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.
(B) 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.
(C) 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:
(i) Limiting the number of witnesses the person may call.
(ii) Limiting the length of the testimony of those witnesses.
(iii) Limiting the person's cross-examination of witnesses.
(iv) Otherwise limiting the participation by the person in the
litigation.
(D) 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.
(3) 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, he or she 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.
(4) 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.
(5) 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.
(g) (1) (A) (i) 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.
(ii) 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.
(iii) 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:
(I) 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.
(II) The commissioner shall receive the amount the court
determines for reasonable attorney's fees and costs.
(III) 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.
(IV) 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.
(iv) 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.
(B) 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.
(C) 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.
(2) (A) 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.
(B) 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 he or
she 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.
(3) 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.
(4) 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.
(5) 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.
(h) (1) 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.
(2) (A) No court shall 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 Attorney General or the person bringing the action is an
original source of the information.
(B) 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.
(i) 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.
(j) 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.
(k) Any employee who is discharged, demoted, suspended,
threatened, harassed, or in any other manner discriminated against in
the terms and conditions of employment by his or her 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.
( l ) (1) 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.
(2) 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.
SEC. 27. Section 1874.86 of the Insurance Code is amended to read:
1874.86. Each insurer subject to this article shall report, at
the request of the commissioner, but not more than annually, to the
department on the following:
(a) The number of vehicles inspected pursuant to Section 1874.85
and the percentage that this number represents of the total number of
vehicles for which it paid a claim for the cost of auto body repairs
in the prior calendar year.
(b) The results of the inspections, including the nature of any
fraud uncovered, and whether or not legal action was pursued.
The department shall make the information provided pursuant to
this section available to the California Highway Patrol and the
Bureau of Automotive Repair.
SEC. 28. Section 12962 of the Insurance Code is amended to read:
12962. The commissioner shall report to the Governor, the
Legislature, and to the committees of the Senate and Assembly having
jurisdiction over insurance all of the following in the annual report
submitted pursuant to Section 12922:
(a) An analysis of the information required by Sections 674.5,
1857.7, 1857.9, 1864, and 12963, including, but not limited to, all
of the following:
(1) An aggregate and an average for all insurers for each item of
information required by these sections.
(2) The number of insurers reporting policies written for each
class during the calendar year.
(3) For each class, the number of insurers reporting a combined
loss ratio of 100 percent or more, and the number reporting a
combined loss ratio of under 100 percent.
(4) An analysis of adjustments made to loss reserves for prior
years.
(5) The change in any item required to be included by paragraphs
(1) to (4), inclusive, from the immediately prior year.
(b) An analysis of the activities of the Department of Insurance
in implementing the provisions of Proposition 103 on the November 8,
1988, general election ballot, as set forth in Article 10 (commencing
with Section 1861.01) of Chapter 9 of Part 2 of Division 1.
(c) Recommendations and proposals, including suggested
legislation, to protect consumers from arbitrary insurance rates and
practices, to encourage a competitive insurance marketplace, to
provide for an accountable Insurance Commissioner, and to ensure that
insurance is fair, available, and affordable for all Californians.
(d) The requirements of this section shall be satisfied if the
analysis required by this section is included in the annual report to
the Governor required by Section 12922, and a copy of that report is
provided to the Legislature.
SEC. 29. Section 14090 of the Insurance Code is amended to read:
14090. Every license, branch office certificate, and pocket card
issued pursuant to this chapter shall expire on the day two years
after the last calendar day of the month in which the initial license
was issued. Licenses issued prior to January 1, 2011, shall expire
on May 31 of each even-numbered year. To renew an unexpired license
or certificate, the licensee shall, on or before the date on which it
would otherwise expire, apply for renewal on a form prescribed by
the commissioner, and pay the renewal fee prescribed by this chapter.
On renewal, the evidence of renewal of the license or certificate as
the commissioner may prescribe, and renewal pocket cards for the
persons mentioned in Section 14034, shall be issued to the licensee.
SEC. 30. Section 14090.1 of the Insurance Code is amended to read:
14090.1. (a) An individual who holds an insurance adjuster
license and who is not exempt under subdivision (b) of this section
shall satisfactorily complete a minimum of 24 hours, of which three
hours are to be in ethics, of continuing education courses pertinent
to the duties and responsibilities of an insurance adjuster license
reported to the insurance commissioner on a biennial basis in
conjunction with his or her license renewal cycle.
(b) This section does not apply to either of the following:
(1) A licensee not licensed for one full year prior to the end of
the applicable continuing education biennium.
(2) A licensee holding a nonresident insurance adjuster license
who has met the continuing education requirements of his or her
designated resident state.
SEC. 31. Section 15054 of the Insurance Code is amended to read:
15054. Every license, branch office certificate, and pocket card
issued pursuant to this chapter shall expire on the day two years
after the last calendar day of the month in which the initial license
was issued. Licenses issued prior to January 1, 2011, shall expire
on May 31 of each even-numbered year. To renew an unexpired license
or certificate, the licensee shall, on or before the date on which it
would otherwise expire, apply for renewal on a form prescribed by
the commissioner, and pay the renewal fee prescribed by this chapter.
On renewal, the evidence of renewal of the license or certificate as
the commissioner may prescribe, and renewal pocket cards for the
persons mentioned in Section 15022 shall be issued to the licensee.
SEC. 32. Section 15059.1 of the Insurance Code is amended to read:
15059.1. (a) An individual who holds a public insurance adjuster
license and who is not exempt under subdivision (b) shall
satisfactorily complete a minimum of 24 hours, of which three hours
are to be in ethics, of continuing education courses pertinent to the
duties and responsibilities of a public insurance adjuster license,
to be reported to the insurance commissioner on a biennial basis in
conjunction with his or her license renewal cycle.
(b) This section shall not apply to:
(1) A licensee not licensed for one full year prior to the end of
the applicable continuing education biennium.
(2) A licensee holding a nonresident public insurance adjuster
license who has met the continuing education requirements of his or
her designated state or residence.
