Insurance: omnibus

The law expands the Department of Insurance’s licensing and enforcement tools, makes a community-investment authority permanent, and speeds safeguards for policyholders using public adjusters after disasters.

What the law does ​

• Makes an insurance license inactive when its holder is dissolved, forfeited, terminated, canceled, or surrendered by the Secretary of State.
• Permanently allows higher insurer investment limits for Department-approved investments identified by the California Organized Investment Network as serving qualified opportunities.
• Updates producer licensing rules, including background-reporting duties, a 21-day deadline to answer department inquiries, and examination-period extensions during certain background reviews.
• Extends organization-license and estate-certificate rules to accident and health or sickness agents.
• Requires the State Compensation Insurance Fund to submit quarterly and annual investment reports to the Department of Insurance.
• Requires the California Earthquake Authority to retain independent auditors subject to the Insurance Commissioner’s approval and file the certified audit report.
• Requires public-adjuster contracts to list an email address and California business address, and shortens deadlines for adjusters to safeguard and remit claim funds, especially during disasters or emergencies.
• Sets two-year staggered terms for noninsurer members of the automobile assigned-risk-plan advisory committee.

Who it affects ​

• Insurers, insurance producers and agencies, public adjusters, and insurance-license applicants.
• Workers’ compensation insurers, employers, and the State Compensation Insurance Fund.
• California Earthquake Authority policyholders and participating insurers.
• Policyholders who hire a public adjuster to assist with an insurance claim.

Context ​

The bill is an omnibus measure making targeted updates across California’s insurance laws.

Breakdown ​

Inactive Insurance Licenses ​

The bill expands when an insurance license becomes inactive because of a Secretary of State action. In addition to suspension, a license becomes inactive if the licensee is dissolved, forfeited, terminated, canceled, or surrendered.

Key takeaways

• An insurance license becomes inactive when the Secretary of State dissolves, forfeits, terminates, cancels, or accepts the surrender of the licensee’s status.
• This expands the current rule, which already makes a license inactive when the Secretary of State suspends the licensee.
• An inactive licensee cannot conduct activities that require an insurance license until it is no longer subject to the relevant Secretary of State action.

Extended Limits for Community Investments ​

SB 1206 permanently continues a higher limit on certain insurer investments that support qualifying California community investment opportunities. The higher limit applies only when the Insurance Commissioner approves the investment in advance and the California Organized Investment Network identifies or qualifies it.

Key takeaways

• The bill removes the January 1, 2027 expiration date for the higher investment limit.
• Insurers may continue to use the higher limit for qualifying discretionary investments beyond 2027.
• The Insurance Commissioner must approve the investment amount and terms in advance.
• The California Organized Investment Network must identify the investment in an opportunity bulletin or otherwise determine that it is qualified.

Insurance License Application Rules ​

This part extends certain licensing rules beyond production agencies to generally cover all applicants and licensees regulated by the insurance commissioner, unless another rule says otherwise. It pauses the 12-month exam deadline while the commissioner reviews potentially disqualifying background issues, expands what counts as background information, and requires prompt complete written responses to the commissioner’s licensing inquiries.

Key takeaways

• Licensing provisions that applied to production agencies generally will apply to all applicants for licenses issued by the commissioner and all licensees the commissioner regulates, unless otherwise stated.
• The bill pauses the requirement that an applicant pass the qualifying exam within the previous 12 months while the commissioner reviews alleged misconduct that could lead to suspension, revocation, or denial of the application.
• Background information for these reviews includes restitution judgments or orders and judgments or orders imposing fines or monetary penalties, but not late fees.
• Applicants and licensees must promptly provide complete written responses to the commissioner’s inquiries about applying for, keeping, or renewing a license.

Accident and Health Agent Organizations ​

The bill extends certain licensing rules to organizations licensed as accident and health or sickness agents. These organizations must follow the existing endorsement process when changing the individuals authorized to act under the organization’s license, and their license becomes inoperative if the last listed individual is removed or leaves. The bill also expands temporary estate certificate eligibility for businesses connected to deceased accident and health or sickness agents.

Key takeaways

• Organizations licensed as accident and health or sickness agents must obtain an endorsement when they add, remove, or change the individuals authorized to transact insurance under the organization’s license.
• An accident and health or sickness agent organization’s license becomes inoperative when the last individual named under that license is removed or terminated.
• The executor or administrator of a deceased accident and health or sickness agent’s estate may qualify for an estate certificate of convenience.
• A surviving spouse or heir entitled to conduct the deceased agent’s business may qualify for an estate certificate of convenience.
• A conservator of the estate of a deceased accident and health or sickness agent may qualify for an estate certificate of convenience.

Workers’ Compensation Fraud Reporting ​

The bill makes the department’s twice-yearly information request to funded district attorneys optional rather than mandatory. The department may still use that request to gather information for required reports on workers’ compensation fraud enforcement.

Key takeaways

• The department is no longer required to send a twice-yearly information request to district attorneys receiving workers’ compensation fraud funds.
• The department is authorized, but not obligated, to send the twice-yearly request.
• The change applies to information gathering for reports on Fraud Division and district attorney activities.

Assigned Risk Plan Advisory Committee Terms ​

This part sets two-year terms for advisory committee members of the automobile insurance assigned risk plan who are not insurers. The terms must be staggered as specified, so members do not all turn over at once.

Key takeaways

• Noninsurer members of the assigned risk plan advisory committee will serve two-year terms.
• The two-year terms for noninsurer members must be staggered as specified.
• The change applies to the advisory committee that advises the Insurance Commissioner on operation of the automobile insurance assigned risk plan.

State Fund Investment Reporting ​

The bill requires State Compensation Insurance Fund officers to give the Department of Insurance regular reports about the fund's investments. Reports must be provided every quarter and annually, following the bill's specified requirements.

Key takeaways

• The State Compensation Insurance Fund must now submit investment reports to the Department of Insurance.
• Fund officers must provide reports quarterly as well as annually.
• The new reporting requirement applies to the fund's investment activities.

California Earthquake Authority Oversight ​

This part shifts responsibility for hiring auditors and filing audit reports to the California Earthquake Authority. It also makes clear that the authority’s civil-service employees must follow state rules on incompatible outside activities.

Key takeaways

• The California Earthquake Authority must select and retain independent qualified auditors to examine its books and accounts.
• The Insurance Commissioner must approve the authority’s selection of auditors.
• Selecting and retaining auditors is expressly made a duty of the authority’s governing board.
• The California Earthquake Authority, rather than the Insurance Commissioner, must file the certified examination report.
• The authority’s employees who are covered by civil-service rules must also comply with specified rules restricting incompatible activities.

Public Adjuster Contract and Payment Deadlines ​

This part updates public insurance adjuster contract disclosures and deadlines for handling claim-settlement funds. Contracts must include the adjuster’s email address and a California business address. It shortens deadlines for depositing and sending settlement funds, especially for claims connected to disasters or emergencies.

Key takeaways

• Public adjuster contracts must include the licensee’s email address and list a California business address.
• A public adjuster generally must deposit claim-settlement funds into the required escrow or trust account within 15 calendar days after receiving them.
• For claims involving an area subject to a catastrophic disaster, state emergency, or local emergency, the adjuster must deposit the funds within 7 calendar days.
• A public adjuster must send settlement funds received on behalf of an insured to the insured within 30 calendar days.
• For disaster- or emergency-related claims, the adjuster must send the settlement funds to the insured within 15 calendar days.

Life Insurance Premium Calculations ​

This part makes additional technical updates to how adjusted premiums and present values are calculated for life insurance policies issued in a specified calendar year. The change concerns the calculation rules rather than creating a new type of insurance requirement.

Key takeaways

• The bill makes technical changes to life insurance calculation rules.
• The changes affect calculations of adjusted premiums and present values.
• The changes apply to life insurance policies issued in a particular calendar year.

No State Reimbursement ​

The bill creates new requirements for certain insurance licensees, and violating those requirements is a crime. Although this can create costs for local enforcement, the bill says the state does not have to reimburse local agencies or school districts for those costs.

Key takeaways

• The bill makes violations of certain new insurance-licensee requirements criminal offenses.
• Because enforcing criminal offenses can require local action, the bill may create a state-mandated local program.
• The bill states that no state reimbursement is required for costs resulting from this act.

Coordinating Changes With SB 876 ​

This part makes additional changes to Insurance Code Section 12928.7 that coordinate with SB 876. The changes take effect only if both bills become law and SB 1206 is enacted after SB 876.

Key takeaways

• The bill adds further amendments to Insurance Code Section 12928.7.
• These amendments apply only if both SB 1206 and SB 876 are enacted.
• SB 1206 must be enacted after SB 876 for these coordinated changes to take effect.