Article 1 - Generally

California Insurance Code — §§ 12919-12938

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Sections (35)

Amended by Stats. 2021, Ch. 50, Sec. 244. (AB 378) Effective January 1, 2022.

Communications to the commissioner or any person in the commissioner’s office in respect to any fact concerning the holder of, or applicant for, any certificate or license issued under this code are made to the commissioner in official confidence within the meaning of Sections 1040 and 1041 of the Evidence Code. Liability shall not exist and no action or proceeding shall lie for or on account of any communication or the making thereof, but the existence of the communication shall not be deemed to dispense with or nullify any requirement of notice, hearing, or production of evidence before the commissioner as otherwise required by law.

§ 12920

Enacted by Stats. 1935, Ch. 145.

The commissioner shall determine the sufficiency and validity of all securities required to be given by persons engaged, or to be engaged, in insurance business, and shall cause such security to be supplemented or renewed in case of the insufficiency or invalidity thereof.

§ 12920.5

Amended by Stats. 2021, Ch. 50, Sec. 245. (AB 378) Effective January 1, 2022.

In addition to and independent of any and all other proper causes for refusal by the commissioner to approve or accept any bond filed or presented for filing with the commissioner under any provision of this code or other laws, the commissioner shall decline to approve, accept, or file any bond, if, in the commissioner’s opinion, the principal and the surety are affiliated in any manner whereby insolvency of the one party would affect the solvency of the other or whereby it is made uncertain whether or not that result might occur.

§ 12921

Amended by Stats. 2021, Ch. 50, Sec. 246. (AB 378) Effective January 1, 2022.

(a)The commissioner shall perform all duties imposed upon the commissioner by the provisions of this code and other laws regulating the business of insurance in this state, and shall enforce the execution of those provisions and laws.

(b)In an administrative action to enforce the provisions of this code and other laws regulating the business of insurance in this state, any settlement is subject to all of the following:

(1)The commissioner may delegate the power to negotiate the terms and conditions of a settlement to designated deputy commissioners. The commissioner may delegate the power to approve a settlement, unless the settlement involves any of the following:

(A)An insurer.

(B)A managing general agent or production agent that manages the business of an insurer.

(C)A title company.

(D)A home protection company.

(E)An insurance adjuster whose claims practices are at issue.

(F)An insurance agent or broker, or an applicant for an insurance agent or broker license, who has allegedly engaged in theft, fraud, or the misappropriation of premium or other funds in an amount that exceeds fifty thousand dollars ($50,000).

(2)Unless specifically provided for in a provision of this code, the commissioner may not agree to any

of the following:

(A)That the respondent contribute, deposit, or transfer any moneys or other resources to a nonprofit entity.

(B)That a respondent contribute, deposit, or transfer any fine, penalty, assessment, cost, or fee except to the commissioner for deposit in the appropriate state fund pursuant to Section 12975.7.

(C)That the commissioner may or shall direct the transfer, distribution, or payment to another person or entity of any fine, penalty, assessment, cost, or fee.

(D)The use of the commissioner’s name, likeness, or voice in any printed material or audio or visual medium, either for general distribution or for distribution to specific recipients.

(3)The commissioner may

only agree to payment to those persons or entities to whom payment may be due because of the respondent’s violation of a provision of this code or other law regulating the business of insurance in this state.

(4)A settlement may only include the sanctions provided by this code or other laws regulating the business of insurance in this state, except that the settlement may include attorney’s fees, costs of the department in bringing the enforcement action, and future costs of the department to ensure compliance with the settlement agreement.

(c)Notwithstanding any other law, the commissioner may accept documents submitted for filing or approval, process transactions, and maintain records in electronic form or as paper documents, and may adopt regulations to further this subdivision.

§ 12921.1

Amended by Stats. 2016, Ch. 304, Sec. 20. (AB 2884) Effective January 1, 2017.

(a)The commissioner shall establish a program on or before July 1, 1991, to investigate complaints and respond to inquiries received pursuant to Section 12921.3, to comply with Section 12921.4, and, when warranted, to bring enforcement actions against insurers or production agencies, as those terms are defined in subdivision (a) of Section 1748.5. The program shall include, but not be limited to, the following:

(1)A toll-free telephone number published in telephone books throughout the state, dedicated to the handling of complaints and inquiries.

(2)Public service announcements to

inform consumers of the toll-free telephone number and how to register a complaint or make an inquiry to the department.

(3)A simple, standardized complaint form designed to assure that complaints will be properly registered and tracked.

(4)Retention of records on complaints for at least three years after the complaint has been closed.

(5)Guidelines to disseminate complaint and enforcement information on individual insurers to the public, that shall include, but not be limited to, the following:

(A)License status.

(B)Number and type of complaints closed within the last full calendar year,

with analogous statistics from the prior two years for comparison. The proportion of those complaints determined by the department to require that corrective action be taken against the insurer, or leading to insurer compromise, or other remedy for the complainant, as compared to those that are found to be without merit. This information shall be disseminated in a fashion that will facilitate identification of meritless complaints and discourage their consideration by consumers and others interested in the records of insurers.

(C)Number and type of violations found, by reference to the line of insurance and the law violated. For the purposes of this subparagraph, the department shall separately report this information for health insurers.

(D)Number and type of enforcement

actions taken.

(E)Ratio of complaints received to total policies in force, or premium dollars paid in a given line, or both. Private passenger automobile insurance ratios shall be calculated as the number of

complaints received to total car years earned in the period studied.

(F)Any other information the department deems is appropriate public information regarding the complaint record of the insurer that will assist the public in selecting an insurer. However, nothing in this section shall be construed to permit disclosure of information or documents in the possession of the department to the extent that the information and those documents are protected from disclosure under any other provision of law.

(6)Procedures and average processing times for each step of complaint mediation, investigation, and enforcement. These procedures shall be consistent with those in Article 6.5 (commencing with Section 790) of Chapter 1 of Part 2 of Division 1 for complaints within the

purview of that article, consistent with those in Article 7 (commencing with Section 1858) of Chapter 9 of Part 2 of Division 1 for complaints within the purview of that article, and consistent with any other provisions of law requiring certain procedures to be followed by the department in investigating or prosecuting complaints against insurers or production agencies.

(7)A list of criteria to determine which violations should be pursued through enforcement action, and enforcement guidelines that set forth appropriate penalties for violations based on the nature, severity, and frequency of the violations.

(8)Referral of complaints not within the department’s jurisdiction to appropriate public and private agencies.

(9)Complaint handling goals that can be tested against surveys carried out pursuant to subdivision (a) of Section 12921.4.

(10)Inclusion in its annual report to the Governor, required by Section 12922, detailed information regarding the program required by this section, that shall include, but not be limited to: a description of the operation of the complaint handling process, listing civil, criminal, and administrative actions taken pursuant to complaints received; the percentage of the department’s personnel years devoted to the handling and resolution of complaints; and suggestions for legislation to improve the complaint handling apparatus and to increase the amount of enforcement action undertaken by the department pursuant to complaints if further enforcement is deemed necessary to ensure proper compliance by insurers or

production agencies with the law.

(b)The commissioner shall promulgate a regulation that sets forth the criteria that the department shall apply to determine if a complaint is deemed to be justified prior to the public release of a complaint against a specifically named insurer or production agency.

(c)The commissioner shall provide to the insurer or production agency a description of any complaint against the insurer or production agency that the commissioner has received and has deemed to be justified at least 30 days prior to public release of a report summarizing the information required by this section. This description shall include all of the following:

(1)The name of the complainant.

(2)The date the complaint was filed.

(3)A succinct description of the facts of the complaint.

(4)A statement of the department’s rationale for determining that the complaint was justified that applies the department’s criteria to the facts of the complaint.

(d)An insurer shall provide to the department the name, mailing address, telephone number, and facsimile number of a person whom the insurer designates as the recipient of all notices, correspondence, and other contacts from the department concerning complaints described in this section. The insurer may change the designation at any time by providing written notice to the Consumer Services Division of the

department.

(e)The commissioner may establish an Internet-accessible complaints response system to distribute and receive complaint information as described in subdivisions (a) and (c). Insurers shall be required to submit and receive complaint information, including, but not limited to, requested claim files, underwriting files, correspondence, and other supporting documents, using any system established by the commissioner pursuant to this subdivision.

(f)For the purposes of this section, notices, correspondence, and other contacts with the designated person shall be deemed contact with the insurer.

§ 12921.15

Amended by Stats. 2005, Ch. 312, Sec. 10. Effective January 1, 2006.

(a)On or before July 1, 1999, the commissioner shall prepare a written report, to be made available by the department to interested individuals upon written request, that details complaint and enforcement information on individual insurers in accordance with guidelines established under paragraph (5) of subdivision (a) of Section 12921.1. The report shall be made available by mail through the department’s consumer toll-free telephone number and through the department’s Internet website and transmitted via electronic mail if the individual has the ability to obtain the report in this manner. No complaint information shall be included in the report required by this section that has not been provided to the insurer in accordance with subdivision (c) of Section 12921.1

(b)The commissioner may also, if deemed appropriate, publish the record of complaints against the production agency that have been determined by the department to be justified and that will assist the public in selecting a production agency. No complaint data shall be published that has not been provided to the production agency in accordance with subdivision (c) of Section 12921.1.

§ 12921.2

Amended by Stats. 2022, Ch. 28, Sec. 119. (SB 1380) Effective January 1, 2023.

All public records of the department and the commissioner subject to disclosure under Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code shall be available for inspection and copying pursuant to those provisions at the offices of the department in the City of Oakland, the City of Los Angeles, and the City of Sacramento. Adequate copy facilities for this purpose shall be made available. Notwithstanding any other law, a person requesting copies of these records shall receive the copies from employees of the department and the fee charged for the copies shall not exceed the actual cost of producing the copies.

§ 12921.3

Amended by Stats. 2005, Ch. 723, Sec. 9.5. Effective January 1, 2006.

(a)The commissioner, in person or through employees of the department, shall receive complaints and inquiries, investigate complaints, prosecute insurers or production agencies when appropriate and according to guidelines determined pursuant to Section 12921.1, and respond to complaints and inquiries by members of the public concerning the handling of insurance claims, including, but not limited to, violations of Article 10 (commencing with Section 1861) of Chapter 9 of Part 2 of Division 1, by insurers or production agencies, or alleged misconduct by insurers or production agencies.

(b)The commissioner shall not decline to investigate complaints for any of the following reasons:

(1)The insured is represented by an attorney in a dispute with an insurer, or is in mediation or arbitration.

(2)The insured has a civil action against an insurer.

(3)The complaint is from an attorney, if the complaint is based upon evidence or reasonable beliefs about violations of law known to an attorney because of a civil action.

(c)The commissioner may defer the investigation until the finality of a dispute, mediation, arbitration, or civil action involving the claim is known.

(d)The commissioner, as he or she deems appropriate, and pursuant to Section 12921.1, shall provide for the education of, and dissemination of information to, members of the general public or licensees of the department concerning insurance matters.

§ 12921.4

Amended by Stats. 2021, Ch. 50, Sec. 247. (AB 378) Effective January 1, 2022.

(a)The commissioner shall, upon receipt of a written complaint with respect to the handling of an insurance claim or other obligation under a policy by an insurer or production agency, or alleged misconduct by an insurer or production agency, notify the complainant of the receipt of the complaint within 10 working days of receipt. Thereafter, the commissioner shall notify the complainant of the final action taken on that complaint within 30 days of the final action.

The department shall include, with each notification of final action, or, at a minimum, with a number of randomly selected notifications of final action sufficient to assure the validity of results, a complaint handling evaluation form. This form shall clearly and concisely seek an

evaluation of the department’s performance in handling the complainant’s grievance. The areas of evaluation shall include, but not be limited to: whether the complaint was handled in a fair and reasonable manner, evaluated thoroughly and without bias; the time required for resolution of the complaint; whether the complaint was referred and, if so, whether it was referred within a satisfactory time; whether the staff involved in handling the complaint demonstrated an adequate knowledge of the issues involved in the complaint; whether the complainant was satisfied with the result of the department’s intervention; and whether the complainant would recommend the department’s complaint handling services to others.

The commissioner shall, if deemed appropriate, notify insurers or production agencies against whom the complaint is made of the nature of the complaint, may request appropriate relief for the complainant, and may meet and confer with the complainant and the

insurer in order to mediate the complaint. This section shall not be construed to give the commissioner power to adjudicate claims.

(b)The commissioner shall ascertain patterns of complaints by insurer, geographic area, insurance line, type of violation, and any other valid basis the commissioner may deem appropriate for further investigation, and periodically evaluate the complaint patterns to determine additional audit, investigative, or enforcement actions which may be taken by the commissioner, and report on all actions taken with respect to those patterns of complaints in the commissioner’s annual report to the Governor pursuant to Section 12922, and to the public. For the purposes of this subdivision, complaints mean those written complaints received by the commissioner under subdivision (a), and written complaints received by the commissioner from any other sources, alleging misconduct or unlawful acts by insurers or production

agencies.

§ 12921.5

Added by Stats. 1941, Ch. 379.

The commissioner may in person or through employees of the division meet with persons, organizations and associations interested in insurance for the purpose of securing cooperation in the enforcement of the insurance laws of this State and may disseminate information concerning the insurance laws of this State for the assistance and information of the public.

§ 12921.6

Added by Stats. 1988, Ch. 855, Sec. 3.

(a)(1) If no fee is designated in this code for the review of filings required to be made pursuant to this code, the commissioner may establish a fee to permit the department to recover the actual cost of review of those filings. The fee so established shall not be increased by more than twenty-five dollars ($25), unless the increase is made by law.

(2)If this code designates a fee for any required filing, which fee the commissioner determines to be inadequate to cover the actual cost of review, the commissioner may assess an additional fee pursuant to this section not to exceed 25 percent of the fee designated by the code for the filing.

(3)Any person assessed a fee under this section shall be entitled, upon request, to receive reasonable substantiation from the department for the fee assessed, based upon the cost records of the department.

(4)As used in this section, “filings” means those items which the insurers are required to file with the department or commissioner pursuant to this code.

(b)The fee provided for by this section shall be assessed without regard to the requirements of Section 12978 as to uniformity of increase, but shall be based upon the actual cost to the department for the review of the filing.

(c)As used in this section, “person” means any person or entity subject to examination by the commissioner, or purporting to do insurance business in this state, or in the process of organization with intent to do insurance business in this state, or from whom the commissioner’s certificate of authority is required for the transaction of business, or whose certificate of authority is revoked or suspended.

§ 12921.7

Added by Stats. 1992, Ch. 793, Sec. 1. Effective January 1, 1993.

Notwithstanding any other provision of law, the following shall apply to the adoption by the commissioner of any regulation as an emergency regulation pursuant to subdivision (b) of Section 11346.1 of the Government Code.

(a)At least 5 working days prior to submission of the emergency regulation to the Office of Administrative Law, the commissioner shall mail a notice of proposed emergency action to every person, group, or association who had previously filed a request for notice of regulatory actions with the commissioner.

(b)The notice of proposed emergency action shall include the following:

(1)A description of the problem and the necessity for the regulation.

(2)A description of the justification for adoption of the regulation as an emergency regulation.

(3)A copy of the text of the proposed emergency regulation.

§ 12921.8

Amended by Stats. 2023, Ch. 204, Sec. 17. (AB 1140) Effective January 1, 2024.

(a)The commissioner may do the following:

(1)Issue a cease and desist order to a person who has acted in a capacity for which a license, registration, or certificate of authority from the commissioner was required but not possessed.

(2)Issue a cease and desist order to a person who has aided or abetted a person described in paragraph (1).

(3)Impose a monetary penalty, pursuant to an order to show cause, on a person described in paragraph (1) or (2). The monetary penalty shall be the greater of the following:

(A)Five times the amount of money received by the person for acting in the capacity for which the license, registration, or certificate of authority was required but not possessed.

(B)Five thousand dollars ($5,000) for each day the person acted in the capacity for which the license, registration, or certificate of authority was required but not possessed. In the absence of contrary evidence, it shall be presumed that a person continuously acted in a capacity for which a license, registration, or certificate of authority was required on each day from the date of the earliest such act until the date those acts were discontinued, as proven by the person at a hearing.

(b)A person to whom a cease and desist order or order to

show cause has been issued, may, within seven days after service of the order, if a hearing has not already been scheduled by the commissioner, request a hearing by filing a request for the hearing with the commissioner. The hearing shall be conducted in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4 (commencing with Section 11370), Chapter 4.5 (commencing with Section 11400), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and the commissioner shall have all the powers granted therein.

(c)A person who has a hearing pursuant to subdivision (b) shall be entitled to have the proceedings and the order of the commissioner reviewed by means of any remedy provided by the Administrative Procedure Act (Chapter 3.5

(commencing with Section 11340), Chapter 4 (commencing with Section 11370), Chapter 4.5 (commencing with Section 11400), and Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code).

§ 12921.9

Added by Stats. 2001, Ch. 727, Sec. 16. Effective January 1, 2002.

(a)A letter or legal opinion signed by the Commissioner or the Chief Counsel of the Department of Insurance that was prepared in response to an inquiry from an insured or other person or entity and that discusses either generally or in connection with a specific fact situation the application of the Insurance Code or regulations promulgated by the commissioner shall be made public. The department may redact the name, address, policy number, and other identifying information regarding a particular insured or other person or entity from the letter or legal opinion when it is made public.

(b)A letter or legal opinion made public pursuant to this section shall not be construed as establishing an agency guideline, criterion, bulletin, manual, instruction, order, standard of general application, rule, or regulation, as those terms are described in Sections 11340.5 and 11342.600 of the Government Code.

§ 12922

Amended by Stats. 2021, Ch. 50, Sec. 248. (AB 378) Effective January 1, 2022.

The commissioner shall, on or before the first day of August in each year, make a report to the Governor, the Legislature, and to the committees of the Senate and Assembly having jurisdiction over insurance containing a tabular statement and synopsis of the reports which have been filed in the commissioner’s office and showing, generally, the condition of the insurance business and interests in this state, and other matters concerning insurance. The report shall also contain a detailed verified statement, of the moneys and fees of office received by the commissioner, and for what purpose.

§ 12922.5

Amended by Stats. 2019, Ch. 497, Sec. 181. (AB 991) Effective January 1, 2020.

(a)The commissioner shall convene a working group to identify, assess, and recommend risk transfer market mechanisms that:

(1)Promote investment in natural infrastructure to reduce the risks of climate change related to catastrophic events.

(2)Create incentives for investment in natural infrastructure to reduce risks to communities.

(3)Provide mitigation incentives for private investment in natural lands to lessen exposure and reduce climate risks to public safety, property, utilities, and infrastructure.

(b)To the extent that the working group recommends risk

transfer market mechanisms that would be provided by insurance and reinsurance companies, the working group shall recommend mechanisms that:

(1)Are profitable to insurance and reinsurance companies.

(2)If appropriate, apply to communities or regions, rather than individual land parcels.

(c)The policies recommended pursuant to subdivisions (a) and (b) shall include all of the following questions:

(1)What are the California analogies to examples in other countries for creating incentives for investment in natural infrastructure as part of insurance policies that mitigate elemental risks?

(2)Can we use insurance to create incentives for wetland restoration to help defend the coast

against storm surge?

(3)Can we create incentives for forests to be managed to reduce the risk of major fires?

(4)Can we reduce the exposure of insurance companies to climate change-related losses through innovative state policies or insurance pricing mechanisms that reward good behavior and charge premiums for actions that increase public safety risks or losses of property or environmental attributes?

(5)Can we develop rating systems based on community risk factors to climate events, and use insurance incentives to make a community more resilient?

§ 12923

Amended by Stats. 1985, Ch. 106, Sec. 105.

(a)With respect to all classes of insurance (1) to (20), inclusive, as defined in Sections 101 to 120, inclusive, “actuary,” for the purposes of this section, means either of the following:

(1)A member of the American Academy of Actuaries.

(2)An individual who has demonstrated by training and experience actuarial competence to the satisfaction of the Insurance Commissioner.

(b)The commissioner shall, after notice and hearing, pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, promulgate reasonable rules and regulations which do all of the following:

(1)Describe the documents which must be signed by an actuary when the documents are filed with the commissioner.

(2)Implement paragraph (2) of subdivision (a).

§ 12923.5

Added by Stats. 2002, Ch. 793, Sec. 2. Effective January 1, 2003.

(a)The Department of Managed Health Care and the Department of Insurance shall maintain a joint senior level working group to ensure clarity for health care consumers about who enforces their patient rights and consistency in the regulations of these departments.

(b)The joint working group shall undertake a review and examination of the Health and Safety Code, the Insurance Code, and the Welfare and Institutions Code as they apply to the Department of Managed Health Care and the Department of Insurance to ensure consistency in consumer protection.

(c)The joint working group shall review and examine all of the following processes in each department:

(1)Grievance and consumer complaint processes, including, but not limited to, outreach, standard complaints, including coverage and medical necessity complaints, independent medical review, and information developed for consumer use.

(2)The processes used to ensure enforcement of the law, including, but not limited to, the medical survey and audit process in the Health and Safety Code and market conduct exams in the Insurance Code.

(3)The processes for regulating the timely payment of claims.

(d)The joint working group shall report its findings to the Insurance Commissioner and the Director of the Department of Managed Health Care for review and approval. The commissioner and the director shall submit the approved final report under signature to the Legislature by January 1 of every year for five years.

§ 12924

Amended by Stats. 2021, Ch. 50, Sec. 249. (AB 378) Effective January 1, 2022.

(a)The commissioner may issue subpoenas and subpoenas duces tecum for witnesses to attend, testify, and produce documents before the commissioner, on any subject touching insurance business, or in aid of the commissioner’s duties. This process may be served, obeyed, and enforced as provided in the Code of Civil Procedure for civil cases. A defaulting witness may, upon application by the commissioner to the superior court, be required by order of the court to appear before the commissioner to testify as the court may order. The court may punish disobedience of its order as a contempt of court.

All the provisions of the Code of Civil Procedure relating to means of production of evidence shall be applicable to any hearing or investigation under this

section. The provisions of this subdivision shall not apply to proceedings required by other provisions of this code to be conducted in accordance with Chapter 5 (commencing with Section 11500), Part 1, Division 3, Title 2 of the Government Code.

(b)A person shall not be excused from testifying or from producing any book, document, or other thing under the person’s control upon any hearing or investigation on the ground that the person’s testimony, or the book, document, or other thing required, may tend to incriminate the person, or may have a tendency to subject the person to punishment for a felony or misdemeanor; but no individual shall be prosecuted or be subjected to punishment for a felony or misdemeanor for or on account of any act, transaction, matter, or thing concerning which that individual is so compelled, after validly claiming the privilege against self-incrimination, to testify or produce, except for perjury or contempt

committed in that testimony.

§ 12925

Amended by Stats. 2021, Ch. 50, Sec. 250. (AB 378) Effective January 1, 2022.

The commissioner shall keep and preserve in a permanent form a full record of the commissioner’s proceedings, including a concise statement of the condition of each insurer, surplus line broker, or motor club examined as to their condition and affairs.

§ 12926