790. The purpose of this article is to regulate trade practices in
the business of insurance in accordance with the intent of Congress
as expressed in the Act of Congress of March 9, 1945 (Public Law 15,
Seventy-ninth Congress), by defining, or providing for the
determination of, all such practices in this State which constitute
unfair methods of competition or unfair or deceptive acts or
practices and by prohibiting the trade practices so defined or
determined.
790.01. This article applies to reciprocal and interinsurance
exchanges, Lloyds insurers, fraternal benefit societies, fraternal
fire insurers, grants and annuities societies, insurers holding
certificates of exemptions, motor clubs, nonprofit hospital
associations, life agents, broker-agents, surplus line brokers and
special lines surplus line brokers as well as all other persons
engaged in the business of insurance.
790.02. No person shall engage in this State in any trade practice
which is defined in this article as, or determined pursuant to this
article to be, an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance.
790.03. The following are hereby defined as unfair methods of
competition and unfair and deceptive acts or practices in the
business of insurance.
(a) Making, issuing, circulating, or causing to be made, issued or
circulated, any estimate, illustration, circular or statement
misrepresenting the terms of any policy issued or to be issued or the
benefits or advantages promised thereby or the dividends or share of
the surplus to be received thereon, or making any false or
misleading statement as to the dividends or share of surplus
previously paid on similar policies, or making any misleading
representation or any misrepresentation as to the financial condition
of any insurer, or as to the legal reserve system upon which any
life insurer operates, or using any name or title of any policy or
class of policies misrepresenting the true nature thereof, or making
any misrepresentation to any policyholder insured in any company for
the purpose of inducing or tending to induce the policyholder to
lapse, forfeit, or surrender his or her insurance.
(b) Making or disseminating or causing to be made or disseminated
before the public in this state, in any newspaper or other
publication, or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatsoever, any
statement containing any assertion, representation or statement with
respect to the business of insurance or with respect to any person in
the conduct of his or her insurance business, which is untrue,
deceptive, or misleading, and which is known, or which by the
exercise of reasonable care should be known, to be untrue, deceptive,
or misleading.
(c) Entering into any agreement to commit, or by any concerted
action committing, any act of boycott, coercion or intimidation
resulting in or tending to result in unreasonable restraint of, or
monopoly in, the business of insurance.
(d) Filing with any supervisory or other public official, or
making, publishing, disseminating, circulating, or delivering to any
person, or placing before the public, or causing directly or
indirectly, to be made, published, disseminated, circulated,
delivered to any person, or placed before the public any false
statement of financial condition of an insurer with intent to
deceive.
(e) Making any false entry in any book, report, or statement of
any insurer with intent to deceive any agent or examiner lawfully
appointed to examine into its condition or into any of its affairs,
or any public official to whom the insurer is required by law to
report, or who has authority by law to examine into its condition or
into any of its affairs, or, with like intent, willfully omitting to
make a true entry of any material fact pertaining to the business of
the insurer in any book, report, or statement of the insurer.
(f) Making or permitting any unfair discrimination between
individuals of the same class and equal expectation of life in the
rates charged for any contract of life insurance or of life annuity
or in the dividends or other benefits payable thereon, or in any
other of the terms and conditions of the contract.
This subdivision shall be interpreted, for any contract of
ordinary life insurance or individual life annuity applied for and
issued on or after January 1, 1981, to require differentials based
upon the sex of the individual insured or annuitant in the rates or
dividends or benefits, or any combination thereof. This requirement
is satisfied if those differentials are substantially supported by
valid pertinent data segregated by sex, including, but not
necessarily limited to, mortality data segregated by sex.
However, for any contract of ordinary life insurance or individual
life annuity applied for and issued on or after January 1, 1981, but
before the compliance date, in lieu of those differentials based on
data segregated by sex, rates, or dividends or benefits, or any
combination thereof, for ordinary life insurance or individual life
annuity on a female life may be calculated as follows: (a) according
to an age not less than three years nor more than six years younger
than the actual age of the female insured or female annuitant, in the
case of a contract of ordinary life insurance with a face value
greater than five thousand dollars ($5,000) or a contract of
individual life annuity; and (b) according to an age not more than
six years younger than the actual age of the female insured, in the
case of a contract of ordinary life insurance with a face value of
five thousand dollars ($5,000) or less. "Compliance date" as used in
this paragraph shall mean the date or dates established as the
operative date or dates by future amendments to this code directing
and authorizing life insurers to use a mortality table containing
mortality data segregated by sex for the calculation of adjusted
premiums and present values for nonforfeiture benefits and valuation
reserves as specified in Sections 10163.5 and 10489.2 or successor
sections.
Notwithstanding the provisions of this subdivision, sex-based
differentials in rates or dividends or benefits, or any combination
thereof, shall not be required for (1) any contract of life insurance
or life annuity issued pursuant to arrangements which may be
considered terms, conditions, or privileges of employment as these
terms are used in Title VII of the Civil Rights Act of 1964 (Public
Law 88-352), as amended, and (2) tax sheltered annuities for
employees of public schools or of tax exempt organizations described
in Section 501(c)(3) of the Internal Revenue Code.
(g) Making or disseminating, or causing to be made or
disseminated, before the public in this state, in any newspaper or
other publication, or any other advertising device, or by public
outcry or proclamation, or in any other manner or means whatever,
whether directly or by implication, any statement that a named
insurer, or named insurers, are members of the California Insurance
Guarantee Association, or insured against insolvency as defined in
Section 119.5. This subdivision shall not be interpreted to prohibit
any activity of the California Insurance Guarantee Association or the
commissioner authorized, directly or by implication, by Article 14.2
(commencing with Section 1063).
(h) Knowingly committing or performing with such frequency as to
indicate a general business practice any of the following unfair
claims settlement practices:
(1) Misrepresenting to claimants pertinent facts or insurance
policy provisions relating to any coverages at issue.
(2) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
policies.
(3) Failing to adopt and implement reasonable standards for the
prompt investigation and processing of claims arising under insurance
policies.
(4) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss requirements have been completed
and submitted by the insured.
(5) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become
reasonably clear.
(6) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by the insureds,
when the insureds have made claims for amounts reasonably similar to
the amounts ultimately recovered.
(7) Attempting to settle a claim by an insured for less than the
amount to which a reasonable person would have believed he or she was
entitled by reference to written or printed advertising material
accompanying or made part of an application.
(8) Attempting to settle claims on the basis of an application
which was altered without notice to, or knowledge or consent of, the
insured, his or her representative, agent, or broker.
(9) Failing, after payment of a claim, to inform insureds or
beneficiaries, upon request by them, of the coverage under which
payment has been made.
(10) Making known to insureds or claimants a practice of the
insurer of appealing from arbitration awards in favor of insureds or
claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration.
(11) Delaying the investigation or payment of claims by requiring
an insured, claimant, or the physician of either, to submit a
preliminary claim report, and then requiring the subsequent
submission of formal proof of loss forms, both of which submissions
contain substantially the same information.
(12) Failing to settle claims promptly, where liability has become
apparent, under one portion of the insurance policy coverage in
order to influence settlements under other portions of the insurance
policy coverage.
(13) Failing to provide promptly a reasonable explanation of the
basis relied on in the insurance policy, in relation to the facts or
applicable law, for the denial of a claim or for the offer of a
compromise settlement.
(14) Directly advising a claimant not to obtain the services of an
attorney.
(15) Misleading a claimant as to the applicable statute of
limitations.
(16) Delaying the payment or provision of hospital, medical, or
surgical benefits for services provided with respect to acquired
immune deficiency syndrome or AIDS-related complex for more than 60
days after the insurer has received a claim for those benefits, where
the delay in claim payment is for the purpose of investigating
whether the condition preexisted the coverage. However, this 60-day
period shall not include any time during which the insurer is
awaiting a response for relevant medical information from a health
care provider.
(i) Canceling or refusing to renew a policy in violation of
Section 676.10.
790.031. The requirements of subdivision (b) of Section 790.034,
and Sections 2071.1 and 10082.3 shall apply only to policies of
residential property insurance as defined in Section 10087, policies
and endorsements containing those coverages prescribed in Chapter 8.5
(commencing with Section 10081) of Part 1 of Division 2, policies
issued by the California Earthquake Authority pursuant to Chapter 8.6
(commencing with Section 10089.5) of Part 1 of Division 2, policies
and endorsements that insure against property damage and are issued
to common interest developments or to associations managing common
interest developments, as those terms are defined in Section 1351 of
the Civil Code, and to policies issued pursuant to Section 120 that
insure against property damage to residential units or contents
thereof owned by one or more persons located in this state.
790.034. (a) Regulations adopted by the commissioner pursuant to
this article that relate to the settlement of claims shall take into
consideration settlement practices by classes of insurers.
(b) (1) Upon receiving notice of a claim, every insurer shall
immediately, but no more than 15 calendar days after receipt of the
claim, provide the insured with a legible reproduction of Section
790.03 of the Insurance Code, in at least 12-point type and a written
notice containing the following:
"In addition to Section 790.03 of the Insurance Code provided
here, Fair Claims Settlement Practices Regulations govern how
insurance claims must be processed in this state. These regulations
are available at the Department of Insurance Internet site,
www.insurance.ca.gov. You may also obtain a copy of these regulations
free of charge from this insurer."
(2) Every insurer shall provide, whether requested orally or in
writing by an insured, a copy of the Fair Claims Settlement Practices
Regulations as set forth in Sections 2695.5, 2695.7, 2695.8, and
2695.9 of subchapter 7.5 of Chapter 5 of Title 10 of the California
Code of Regulations, unless the regulations are inapplicable to that
class of insurer. These regulations shall be provided to the insured
within 15 calendar days of request.
(3) The provisions of this subdivision shall apply to all insurers
except for those that are licensed pursuant to Chapter 1 (commencing
with Section 12340) of Part 6 of Division 2, with respect to
policies and endorsements described in Section 790.031.
790.035. (a) Any person who engages in any unfair method of
competition or any unfair or deceptive act or practice defined in
Section 790.03 is liable to the state for a civil penalty to be fixed
by the commissioner, not to exceed five thousand dollars ($5,000)
for each act, or, if the act or practice was willful, a civil penalty
not to exceed ten thousand dollars ($10,000) for each act. The
commissioner shall have the discretion to establish what constitutes
an act. However, when the issuance, amendment, or servicing of a
policy or endorsement is inadvertent, all of those acts shall be a
single act for the purpose of this section.
(b) The penalty imposed by this section shall be imposed by and
determined by the commissioner as provided by Section 790.05. The
penalty imposed by this section is appealable by means of any remedy
provided by Section 12940 or by Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code.
790.036. (a) It is an unfair and deceptive act or practice in the
business of insurance for an insurer to advertise insurance that it
will not sell.
(b) Nothing in this section shall be construed to prohibit any
insurer from advertising insurance products for which it is licensed
to sell in this state where the product is not available for sale so
long as the unavailability is disclosed in the advertisement.
(c) A violation of this section is subject to the sanctions
provided for by this article.
(d) An intentional violation of this section is a misdemeanor
punishable by a fine not exceeding ten thousand dollars ($10,000).
(e) This section does not apply to any insurer that refuses to
sell a policy of insurance on the basis of its underwriting
guidelines.
(f) This section does not apply to advertisements by an insurer
where the advertisements are broadcast and originate from outside
this state. As used in this subdivision, "broadcast" includes
electronic media, television, and radio. As used in this subdivision,
"originate from outside this state" includes cable transmittal of
programs broadcast by stations located outside California.
790.037. (a) It is an unfair business practice for a health
insurance agent or broker to sell, solicit, or negotiate the purchase
of health insurance by any of the following methods:
(1) The use of a marketing technique known as cold lead
advertising when marketing a Medicare product. As used in this
section, "cold lead advertising" means making use directly or
indirectly of a method of marketing that fails to disclose in a
conspicuous manner that a purpose of the marketing is health
insurance sales solicitation and that contact will be made by a
health insurance agent or broker.
(2) The use of an appointment that was made to discuss a
particular Medicare product or to solicit the sale of a particular
Medicare product in order to solicit the sale of another Medicare
product or other health insurance products, unless the consumer
specifically agrees in advance of the appointment to discuss that
other Medicare product or other types of health insurance products
during the same appointment.
(b) As used in this section, "Medicare product" includes Medicare
Parts A, B, C, and D, and Medicare supplement plans.
790.04. The commissioner shall have power to examine and
investigate into the affairs of every person engaged in the business
of insurance in the State in order to determine whether such person
has been or is engaged in any unfair method of competition or in any
unfair or deceptive act or practice prohibited by Section 790.03 or
determined pursuant to this article to be an unfair method of
competition or an unfair or deceptive practice in the business of
insurance. Such investigation may be conducted pursuant to Article 2
(commencing at Section 11180) of Chapter 2, Part 1, Division 3, Title
2 of the Government Code.
790.05. Whenever the commissioner shall have reason to believe that
a person has been engaged or is engaging in this state in any unfair
method of competition or any unfair or deceptive act or practice
defined in Section 790.03, and that a proceeding by the commissioner
in respect thereto would be to the interest of the public, he or she
shall issue and serve upon that person an order to show cause
containing a statement of the charges in that respect, a statement of
that person's potential liability under Section 790.035, and a
notice of a hearing thereon to be held at a time and place fixed
therein, which shall not be less than 30 days after the service
thereof, for the purpose of determining whether the commissioner
should issue an order to that person to, pay the penalty imposed by
Section 790.035, and to cease and desist those methods, acts, or
practices or any of them.
If the charges or any of them are found to be justified the
commissioner shall issue and cause to be served upon that person an
order requiring that person to pay the penalty imposed by Section
790.035 and to cease and desist from engaging in those methods, acts,
or practices found to be unfair or deceptive.
The hearing shall be conducted in accordance with the
Administrative Procedure Act, Chapter 5 (commencing at Section 11500)
of Part 1 of Division 3 of Title 2 of the Government Code, except
that the hearings may be conducted by an administrative law judge in
the administrative law bureau when the proceedings involve a common
question of law or fact with another proceeding arising under other
Insurance Code sections that may be conducted by administrative law
bureau administrative law judges. The commissioner and the appointed
administrative law judge shall have all the powers granted under the
Administrative Procedure Act.
The person shall be entitled to have the proceedings and the order
reviewed by means of any remedy provided by Section 12940 of this
code or by the Administrative Procedure Act.
790.06. (a) Whenever the commissioner shall have reason to believe
that any person engaged in the business of insurance is engaging in
this state in any method of competition or in any act or practice in
the conduct of the business that is not defined in Section 790.03,
and that the method is unfair or that the act or practice is unfair
or deceptive and that a proceeding by him or her in respect thereto
would be in the interest of the public, he or she may issue and serve
upon that person an order to show cause containing a statement of
the methods, acts or practices alleged to be unfair or deceptive and
a notice of hearing thereon to be held at a time and place fixed
therein, which shall not be less than 30 days after the service
thereof, for the purpose of determining whether the alleged methods,
acts or practices or any of them should be declared to be unfair or
deceptive within the meaning of this article. The order shall specify
the reason why the method of competition is alleged to be unfair or
the act or practice is alleged to be unfair or deceptive.
The hearings provided by this section shall be conducted in
accordance with the Administrative Procedure Act (Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code), except that the hearings may be conducted by
an administrative law judge in the administrative law bureau when the
proceedings involve a common question of law or fact with another
proceeding arising under other Insurance Code sections that may be
conducted by administrative law bureau administrative law judges. The
commissioner and the appointed administrative law judge shall have
all the powers granted under the Administrative Procedure Act. If the
alleged methods, acts, or practices or any of them are found to be
unfair or deceptive within the meaning of this article the
commissioner shall issue and service upon that person his or her
written report so declaring.
(b) If the report charges a violation of this article and if the
method of competition, act or practice has not been discontinued, the
commissioner may, through the Attorney General of this state, at any
time after 30 days after the service of the report cause a petition
to be filed in the superior court of this state within the county
wherein the person resides or has his or her principal place of
business, to enjoin and restrain the person from engaging in the
method, act or practice. The court shall have jurisdiction of the
proceeding and shall have power to make and enter appropriate orders
in connection therewith and to issue any writs as are ancillary to
its jurisdiction or are necessary in its judgment to prevent injury
to the public pendente lite.
(c) A transcript of the proceedings before the commissioner,
including all evidence taken and the report and findings shall be
filed with the petition. If either party shall apply to the court for
leave to adduce additional evidence and shall show, to the
satisfaction of the court, that the additional evidence is material
and there were reasonable grounds for the failure to adduce the
evidence in the proceeding before the commissioner, the court may
order the additional evidence to be taken before the commissioner and
to be adduced upon the hearing in the manner and upon the terms and
conditions as to the court may seem proper. The commissioner may
modify his or her findings of fact or make new findings by reason of
the additional evidence so taken, and shall file modified or new
findings with the return of the additional evidence.
(d) If the court finds that the method of competition complained
of is unfair or that the act or practice complained of is unfair or
deceptive, that the proceeding by the commissioner with respect
thereto is to the interest of the public and that the findings of the
commissioner are supported by the weight of the evidence, it shall
issue its order enjoining and restraining the continuance of the
method of competition, act or practice.
790.07. Whenever the commissioner shall have reason to believe that
any person has violated a cease and desist order issued pursuant to
Section 790.05 or a court order issued pursuant to Section 790.06,
after the order has become final, and while the order is still in
effect, the commissioner may, after a hearing at which it is
determined that the violation was committed, order that person to
forfeit and pay to the State of California a sum not to exceed five
thousand dollars ($5,000) plus any penalty due under Section 790.05,
which may be recovered in a civil action, except that, if the
violation is found to be willful, the amount of the penalty may be a
sum not to exceed fifty-five thousand dollars ($55,000) plus the
penalty due under Section 790.05.
For the purposes of this section, the failure to pay any penalty
imposed pursuant to Section 790.035 which has become final shall
constitute a violation of the cease and desist order.
For any subsequent violation of the cease and desist order or of
the court order or the order to pay the penalty, while the order is
still in effect, the commissioner may, after hearing, suspend or
revoke the license or certificate of that person for a period not
exceeding one year; provided, however, no proceeding shall be based
upon the subsequent violation unless the same was committed or
continued after the date on which the order imposing the penalty
pursuant to the preceding paragraph became final.
The hearings provided by this section shall be conducted in
accordance with the Administrative Procedure Act, except that the
hearings may be conducted by an administrative law judge in the
administrative law bureau when the proceedings involve a common
question of law or fact with another proceeding arising under other
Insurance Code sections that may be conducted by administrative law
bureau administrative law judges. The commissioner and the appointed
administrative law judge shall have all the powers granted under the
Administrative Procedure Act.
The person shall be entitled to have the proceedings and the order
of the commissioner therein reviewed by means of any remedy provided
by Section 12940 or by the Administrative Procedure Act.
790.08. The powers vested in the commissioner in this article shall
be additional to any other powers to enforce any penalties, fines or
forfeitures, denials, suspensions or revocations of licenses or
certificates authorized by law with respect to the methods, acts and
practices hereby declared to be unfair or deceptive.
790.09. No order to cease and desist issued under this article
directed to any person or subsequent administrative or judicial
proceeding to enforce the same shall in any way relieve or absolve
such person from any administrative action against the license or
certificate of such person, civil liability or criminal penalty under
the laws of this State arising out of the methods, acts or practices
found unfair or deceptive.
790.10. The commissioner shall, from time to time as conditions
warrant, after notice and public hearing, promulgate reasonable rules
and regulations, and amendments and additions thereto, as are
necessary to administer this article.
790.15. (a) If an insurer or any affiliate of an insurer has failed
to pay any valid claim from Holocaust survivors, the certificate of
authority of the insurer shall be suspended until the insurer, or its
affiliates, pays the claim or claims.
(b) As used in this section:
(1) "Holocaust survivor" means any person who is the beneficiary
of an insurance policy, if the insurance policy insured a person's
life, property, or other interest, and the insured person was killed,
died, was displaced, or was otherwise a victim of persecution of
Jewish and other peoples preceding and during World War II by
Germany, its allies, or sympathizers.
(2) "Beneficiary" means any person or entity entitled to recover
under any policy of insurance, including any named beneficiary, any
heir of a named beneficiary, and any other person entitled to recover
under the policy.
(3) "Claim" means any claim submitted by a Holocaust survivor or
other beneficiary arising under an insurance policy for any loss or
damage caused by or arising because of discriminatory practices or
persecution by the Nazi-controlled German government or its allies,
or by insurers that refused to pay claims because of a claim that
policies of insurance or records were missing or confiscated because
of actions by the Nazi-controlled German government or its agents or
allies. Claim also includes any claim by Holocaust survivors or
beneficiaries to collect proceeds from dowry or education policies or
from annuities.
(4) An "affiliate" of, or person "affiliated" with, a specific
person, means a person who directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
(5) "Control" includes the terms "controlling," "controlled by,"
and "under common control with," and means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, by contract other than a commercial contract for
goods or nonmanagement services, or otherwise, unless the power is
the result of an official position with or corporate office held by
the person. Control shall be presumed to exist if any person,
directly or indirectly, owns, controls, holds with the power to vote,
or holds proxies representing, more than 10 percent of the voting
securities of any other person.
(c) An action to suspend a certificate of authority under this
section shall be conducted in accordance with the Administrative
Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code), except that (1) if
the Office of Administrative Hearings is unable to assign an
administrative law judge to preside over a hearing that commences
within 30 days of the filing of an accusation or order initiating an
action under this section, the administrative law judge may be
appointed by the commissioner; and (2) if the commissioner determines
that it is necessary to protect the interests of Holocaust
survivors, he or she may issue an order of suspension pursuant to
this section prior to holding a hearing.
(d) If the commissioner issues an order pursuant to paragraph (2)
of subdivision (c), he or she shall immediately issue and serve upon
the insurer a statement of reasons for the immediate action, as well
as a copy of the accusation or order containing the allegations that
support the order. Any order issued pursuant to this subdivision
shall include a notice stating the time and place of a hearing on the
order, which shall not be less than 20, nor more than 30 days after
the order is served.
(e) When considering an action to suspend a certificate of
authority under this section, the commissioner shall include
consideration of whether the insurer has participated in good faith
in an international commission on Holocaust survivor insurance
claims, and whether the commission is making meaningful and
expeditious progress toward paying claims to survivors and righting
the historic wrong done to Holocaust victims.
790. The purpose of this article is to regulate trade practices in
the business of insurance in accordance with the intent of Congress
as expressed in the Act of Congress of March 9, 1945 (Public Law 15,
Seventy-ninth Congress), by defining, or providing for the
determination of, all such practices in this State which constitute
unfair methods of competition or unfair or deceptive acts or
practices and by prohibiting the trade practices so defined or
determined.
790.01. This article applies to reciprocal and interinsurance
exchanges, Lloyds insurers, fraternal benefit societies, fraternal
fire insurers, grants and annuities societies, insurers holding
certificates of exemptions, motor clubs, nonprofit hospital
associations, life agents, broker-agents, surplus line brokers and
special lines surplus line brokers as well as all other persons
engaged in the business of insurance.
790.02. No person shall engage in this State in any trade practice
which is defined in this article as, or determined pursuant to this
article to be, an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance.
790.03. The following are hereby defined as unfair methods of
competition and unfair and deceptive acts or practices in the
business of insurance.
(a) Making, issuing, circulating, or causing to be made, issued or
circulated, any estimate, illustration, circular or statement
misrepresenting the terms of any policy issued or to be issued or the
benefits or advantages promised thereby or the dividends or share of
the surplus to be received thereon, or making any false or
misleading statement as to the dividends or share of surplus
previously paid on similar policies, or making any misleading
representation or any misrepresentation as to the financial condition
of any insurer, or as to the legal reserve system upon which any
life insurer operates, or using any name or title of any policy or
class of policies misrepresenting the true nature thereof, or making
any misrepresentation to any policyholder insured in any company for
the purpose of inducing or tending to induce the policyholder to
lapse, forfeit, or surrender his or her insurance.
(b) Making or disseminating or causing to be made or disseminated
before the public in this state, in any newspaper or other
publication, or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatsoever, any
statement containing any assertion, representation or statement with
respect to the business of insurance or with respect to any person in
the conduct of his or her insurance business, which is untrue,
deceptive, or misleading, and which is known, or which by the
exercise of reasonable care should be known, to be untrue, deceptive,
or misleading.
(c) Entering into any agreement to commit, or by any concerted
action committing, any act of boycott, coercion or intimidation
resulting in or tending to result in unreasonable restraint of, or
monopoly in, the business of insurance.
(d) Filing with any supervisory or other public official, or
making, publishing, disseminating, circulating, or delivering to any
person, or placing before the public, or causing directly or
indirectly, to be made, published, disseminated, circulated,
delivered to any person, or placed before the public any false
statement of financial condition of an insurer with intent to
deceive.
(e) Making any false entry in any book, report, or statement of
any insurer with intent to deceive any agent or examiner lawfully
appointed to examine into its condition or into any of its affairs,
or any public official to whom the insurer is required by law to
report, or who has authority by law to examine into its condition or
into any of its affairs, or, with like intent, willfully omitting to
make a true entry of any material fact pertaining to the business of
the insurer in any book, report, or statement of the insurer.
(f) Making or permitting any unfair discrimination between
individuals of the same class and equal expectation of life in the
rates charged for any contract of life insurance or of life annuity
or in the dividends or other benefits payable thereon, or in any
other of the terms and conditions of the contract.
This subdivision shall be interpreted, for any contract of
ordinary life insurance or individual life annuity applied for and
issued on or after January 1, 1981, to require differentials based
upon the sex of the individual insured or annuitant in the rates or
dividends or benefits, or any combination thereof. This requirement
is satisfied if those differentials are substantially supported by
valid pertinent data segregated by sex, including, but not
necessarily limited to, mortality data segregated by sex.
However, for any contract of ordinary life insurance or individual
life annuity applied for and issued on or after January 1, 1981, but
before the compliance date, in lieu of those differentials based on
data segregated by sex, rates, or dividends or benefits, or any
combination thereof, for ordinary life insurance or individual life
annuity on a female life may be calculated as follows: (a) according
to an age not less than three years nor more than six years younger
than the actual age of the female insured or female annuitant, in the
case of a contract of ordinary life insurance with a face value
greater than five thousand dollars ($5,000) or a contract of
individual life annuity; and (b) according to an age not more than
six years younger than the actual age of the female insured, in the
case of a contract of ordinary life insurance with a face value of
five thousand dollars ($5,000) or less. "Compliance date" as used in
this paragraph shall mean the date or dates established as the
operative date or dates by future amendments to this code directing
and authorizing life insurers to use a mortality table containing
mortality data segregated by sex for the calculation of adjusted
premiums and present values for nonforfeiture benefits and valuation
reserves as specified in Sections 10163.5 and 10489.2 or successor
sections.
Notwithstanding the provisions of this subdivision, sex-based
differentials in rates or dividends or benefits, or any combination
thereof, shall not be required for (1) any contract of life insurance
or life annuity issued pursuant to arrangements which may be
considered terms, conditions, or privileges of employment as these
terms are used in Title VII of the Civil Rights Act of 1964 (Public
Law 88-352), as amended, and (2) tax sheltered annuities for
employees of public schools or of tax exempt organizations described
in Section 501(c)(3) of the Internal Revenue Code.
(g) Making or disseminating, or causing to be made or
disseminated, before the public in this state, in any newspaper or
other publication, or any other advertising device, or by public
outcry or proclamation, or in any other manner or means whatever,
whether directly or by implication, any statement that a named
insurer, or named insurers, are members of the California Insurance
Guarantee Association, or insured against insolvency as defined in
Section 119.5. This subdivision shall not be interpreted to prohibit
any activity of the California Insurance Guarantee Association or the
commissioner authorized, directly or by implication, by Article 14.2
(commencing with Section 1063).
(h) Knowingly committing or performing with such frequency as to
indicate a general business practice any of the following unfair
claims settlement practices:
(1) Misrepresenting to claimants pertinent facts or insurance
policy provisions relating to any coverages at issue.
(2) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
policies.
(3) Failing to adopt and implement reasonable standards for the
prompt investigation and processing of claims arising under insurance
policies.
(4) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss requirements have been completed
and submitted by the insured.
(5) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become
reasonably clear.
(6) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by the insureds,
when the insureds have made claims for amounts reasonably similar to
the amounts ultimately recovered.
(7) Attempting to settle a claim by an insured for less than the
amount to which a reasonable person would have believed he or she was
entitled by reference to written or printed advertising material
accompanying or made part of an application.
(8) Attempting to settle claims on the basis of an application
which was altered without notice to, or knowledge or consent of, the
insured, his or her representative, agent, or broker.
(9) Failing, after payment of a claim, to inform insureds or
beneficiaries, upon request by them, of the coverage under which
payment has been made.
(10) Making known to insureds or claimants a practice of the
insurer of appealing from arbitration awards in favor of insureds or
claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration.
(11) Delaying the investigation or payment of claims by requiring
an insured, claimant, or the physician of either, to submit a
preliminary claim report, and then requiring the subsequent
submission of formal proof of loss forms, both of which submissions
contain substantially the same information.
(12) Failing to settle claims promptly, where liability has become
apparent, under one portion of the insurance policy coverage in
order to influence settlements under other portions of the insurance
policy coverage.
(13) Failing to provide promptly a reasonable explanation of the
basis relied on in the insurance policy, in relation to the facts or
applicable law, for the denial of a claim or for the offer of a
compromise settlement.
(14) Directly advising a claimant not to obtain the services of an
attorney.
(15) Misleading a claimant as to the applicable statute of
limitations.
(16) Delaying the payment or provision of hospital, medical, or
surgical benefits for services provided with respect to acquired
immune deficiency syndrome or AIDS-related complex for more than 60
days after the insurer has received a claim for those benefits, where
the delay in claim payment is for the purpose of investigating
whether the condition preexisted the coverage. However, this 60-day
period shall not include any time during which the insurer is
awaiting a response for relevant medical information from a health
care provider.
(i) Canceling or refusing to renew a policy in violation of
Section 676.10.
790.031. The requirements of subdivision (b) of Section 790.034,
and Sections 2071.1 and 10082.3 shall apply only to policies of
residential property insurance as defined in Section 10087, policies
and endorsements containing those coverages prescribed in Chapter 8.5
(commencing with Section 10081) of Part 1 of Division 2, policies
issued by the California Earthquake Authority pursuant to Chapter 8.6
(commencing with Section 10089.5) of Part 1 of Division 2, policies
and endorsements that insure against property damage and are issued
to common interest developments or to associations managing common
interest developments, as those terms are defined in Section 1351 of
the Civil Code, and to policies issued pursuant to Section 120 that
insure against property damage to residential units or contents
thereof owned by one or more persons located in this state.
790.034. (a) Regulations adopted by the commissioner pursuant to
this article that relate to the settlement of claims shall take into
consideration settlement practices by classes of insurers.
(b) (1) Upon receiving notice of a claim, every insurer shall
immediately, but no more than 15 calendar days after receipt of the
claim, provide the insured with a legible reproduction of Section
790.03 of the Insurance Code, in at least 12-point type and a written
notice containing the following:
"In addition to Section 790.03 of the Insurance Code provided
here, Fair Claims Settlement Practices Regulations govern how
insurance claims must be processed in this state. These regulations
are available at the Department of Insurance Internet site,
www.insurance.ca.gov. You may also obtain a copy of these regulations
free of charge from this insurer."
(2) Every insurer shall provide, whether requested orally or in
writing by an insured, a copy of the Fair Claims Settlement Practices
Regulations as set forth in Sections 2695.5, 2695.7, 2695.8, and
2695.9 of subchapter 7.5 of Chapter 5 of Title 10 of the California
Code of Regulations, unless the regulations are inapplicable to that
class of insurer. These regulations shall be provided to the insured
within 15 calendar days of request.
(3) The provisions of this subdivision shall apply to all insurers
except for those that are licensed pursuant to Chapter 1 (commencing
with Section 12340) of Part 6 of Division 2, with respect to
policies and endorsements described in Section 790.031.
790.035. (a) Any person who engages in any unfair method of
competition or any unfair or deceptive act or practice defined in
Section 790.03 is liable to the state for a civil penalty to be fixed
by the commissioner, not to exceed five thousand dollars ($5,000)
for each act, or, if the act or practice was willful, a civil penalty
not to exceed ten thousand dollars ($10,000) for each act. The
commissioner shall have the discretion to establish what constitutes
an act. However, when the issuance, amendment, or servicing of a
policy or endorsement is inadvertent, all of those acts shall be a
single act for the purpose of this section.
(b) The penalty imposed by this section shall be imposed by and
determined by the commissioner as provided by Section 790.05. The
penalty imposed by this section is appealable by means of any remedy
provided by Section 12940 or by Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code.
790.036. (a) It is an unfair and deceptive act or practice in the
business of insurance for an insurer to advertise insurance that it
will not sell.
(b) Nothing in this section shall be construed to prohibit any
insurer from advertising insurance products for which it is licensed
to sell in this state where the product is not available for sale so
long as the unavailability is disclosed in the advertisement.
(c) A violation of this section is subject to the sanctions
provided for by this article.
(d) An intentional violation of this section is a misdemeanor
punishable by a fine not exceeding ten thousand dollars ($10,000).
(e) This section does not apply to any insurer that refuses to
sell a policy of insurance on the basis of its underwriting
guidelines.
(f) This section does not apply to advertisements by an insurer
where the advertisements are broadcast and originate from outside
this state. As used in this subdivision, "broadcast" includes
electronic media, television, and radio. As used in this subdivision,
"originate from outside this state" includes cable transmittal of
programs broadcast by stations located outside California.
790.037. (a) It is an unfair business practice for a health
insurance agent or broker to sell, solicit, or negotiate the purchase
of health insurance by any of the following methods:
(1) The use of a marketing technique known as cold lead
advertising when marketing a Medicare product. As used in this
section, "cold lead advertising" means making use directly or
indirectly of a method of marketing that fails to disclose in a
conspicuous manner that a purpose of the marketing is health
insurance sales solicitation and that contact will be made by a
health insurance agent or broker.
(2) The use of an appointment that was made to discuss a
particular Medicare product or to solicit the sale of a particular
Medicare product in order to solicit the sale of another Medicare
product or other health insurance products, unless the consumer
specifically agrees in advance of the appointment to discuss that
other Medicare product or other types of health insurance products
during the same appointment.
(b) As used in this section, "Medicare product" includes Medicare
Parts A, B, C, and D, and Medicare supplement plans.
790.04. The commissioner shall have power to examine and
investigate into the affairs of every person engaged in the business
of insurance in the State in order to determine whether such person
has been or is engaged in any unfair method of competition or in any
unfair or deceptive act or practice prohibited by Section 790.03 or
determined pursuant to this article to be an unfair method of
competition or an unfair or deceptive practice in the business of
insurance. Such investigation may be conducted pursuant to Article 2
(commencing at Section 11180) of Chapter 2, Part 1, Division 3, Title
2 of the Government Code.
790.05. Whenever the commissioner shall have reason to believe that
a person has been engaged or is engaging in this state in any unfair
method of competition or any unfair or deceptive act or practice
defined in Section 790.03, and that a proceeding by the commissioner
in respect thereto would be to the interest of the public, he or she
shall issue and serve upon that person an order to show cause
containing a statement of the charges in that respect, a statement of
that person's potential liability under Section 790.035, and a
notice of a hearing thereon to be held at a time and place fixed
therein, which shall not be less than 30 days after the service
thereof, for the purpose of determining whether the commissioner
should issue an order to that person to, pay the penalty imposed by
Section 790.035, and to cease and desist those methods, acts, or
practices or any of them.
If the charges or any of them are found to be justified the
commissioner shall issue and cause to be served upon that person an
order requiring that person to pay the penalty imposed by Section
790.035 and to cease and desist from engaging in those methods, acts,
or practices found to be unfair or deceptive.
The hearing shall be conducted in accordance with the
Administrative Procedure Act, Chapter 5 (commencing at Section 11500)
of Part 1 of Division 3 of Title 2 of the Government Code, except
that the hearings may be conducted by an administrative law judge in
the administrative law bureau when the proceedings involve a common
question of law or fact with another proceeding arising under other
Insurance Code sections that may be conducted by administrative law
bureau administrative law judges. The commissioner and the appointed
administrative law judge shall have all the powers granted under the
Administrative Procedure Act.
The person shall be entitled to have the proceedings and the order
reviewed by means of any remedy provided by Section 12940 of this
code or by the Administrative Procedure Act.
790.06. (a) Whenever the commissioner shall have reason to believe
that any person engaged in the business of insurance is engaging in
this state in any method of competition or in any act or practice in
the conduct of the business that is not defined in Section 790.03,
and that the method is unfair or that the act or practice is unfair
or deceptive and that a proceeding by him or her in respect thereto
would be in the interest of the public, he or she may issue and serve
upon that person an order to show cause containing a statement of
the methods, acts or practices alleged to be unfair or deceptive and
a notice of hearing thereon to be held at a time and place fixed
therein, which shall not be less than 30 days after the service
thereof, for the purpose of determining whether the alleged methods,
acts or practices or any of them should be declared to be unfair or
deceptive within the meaning of this article. The order shall specify
the reason why the method of competition is alleged to be unfair or
the act or practice is alleged to be unfair or deceptive.
The hearings provided by this section shall be conducted in
accordance with the Administrative Procedure Act (Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code), except that the hearings may be conducted by
an administrative law judge in the administrative law bureau when the
proceedings involve a common question of law or fact with another
proceeding arising under other Insurance Code sections that may be
conducted by administrative law bureau administrative law judges. The
commissioner and the appointed administrative law judge shall have
all the powers granted under the Administrative Procedure Act. If the
alleged methods, acts, or practices or any of them are found to be
unfair or deceptive within the meaning of this article the
commissioner shall issue and service upon that person his or her
written report so declaring.
(b) If the report charges a violation of this article and if the
method of competition, act or practice has not been discontinued, the
commissioner may, through the Attorney General of this state, at any
time after 30 days after the service of the report cause a petition
to be filed in the superior court of this state within the county
wherein the person resides or has his or her principal place of
business, to enjoin and restrain the person from engaging in the
method, act or practice. The court shall have jurisdiction of the
proceeding and shall have power to make and enter appropriate orders
in connection therewith and to issue any writs as are ancillary to
its jurisdiction or are necessary in its judgment to prevent injury
to the public pendente lite.
(c) A transcript of the proceedings before the commissioner,
including all evidence taken and the report and findings shall be
filed with the petition. If either party shall apply to the court for
leave to adduce additional evidence and shall show, to the
satisfaction of the court, that the additional evidence is material
and there were reasonable grounds for the failure to adduce the
evidence in the proceeding before the commissioner, the court may
order the additional evidence to be taken before the commissioner and
to be adduced upon the hearing in the manner and upon the terms and
conditions as to the court may seem proper. The commissioner may
modify his or her findings of fact or make new findings by reason of
the additional evidence so taken, and shall file modified or new
findings with the return of the additional evidence.
(d) If the court finds that the method of competition complained
of is unfair or that the act or practice complained of is unfair or
deceptive, that the proceeding by the commissioner with respect
thereto is to the interest of the public and that the findings of the
commissioner are supported by the weight of the evidence, it shall
issue its order enjoining and restraining the continuance of the
method of competition, act or practice.
790.07. Whenever the commissioner shall have reason to believe that
any person has violated a cease and desist order issued pursuant to
Section 790.05 or a court order issued pursuant to Section 790.06,
after the order has become final, and while the order is still in
effect, the commissioner may, after a hearing at which it is
determined that the violation was committed, order that person to
forfeit and pay to the State of California a sum not to exceed five
thousand dollars ($5,000) plus any penalty due under Section 790.05,
which may be recovered in a civil action, except that, if the
violation is found to be willful, the amount of the penalty may be a
sum not to exceed fifty-five thousand dollars ($55,000) plus the
penalty due under Section 790.05.
For the purposes of this section, the failure to pay any penalty
imposed pursuant to Section 790.035 which has become final shall
constitute a violation of the cease and desist order.
For any subsequent violation of the cease and desist order or of
the court order or the order to pay the penalty, while the order is
still in effect, the commissioner may, after hearing, suspend or
revoke the license or certificate of that person for a period not
exceeding one year; provided, however, no proceeding shall be based
upon the subsequent violation unless the same was committed or
continued after the date on which the order imposing the penalty
pursuant to the preceding paragraph became final.
The hearings provided by this section shall be conducted in
accordance with the Administrative Procedure Act, except that the
hearings may be conducted by an administrative law judge in the
administrative law bureau when the proceedings involve a common
question of law or fact with another proceeding arising under other
Insurance Code sections that may be conducted by administrative law
bureau administrative law judges. The commissioner and the appointed
administrative law judge shall have all the powers granted under the
Administrative Procedure Act.
The person shall be entitled to have the proceedings and the order
of the commissioner therein reviewed by means of any remedy provided
by Section 12940 or by the Administrative Procedure Act.
790.08. The powers vested in the commissioner in this article shall
be additional to any other powers to enforce any penalties, fines or
forfeitures, denials, suspensions or revocations of licenses or
certificates authorized by law with respect to the methods, acts and
practices hereby declared to be unfair or deceptive.
790.09. No order to cease and desist issued under this article
directed to any person or subsequent administrative or judicial
proceeding to enforce the same shall in any way relieve or absolve
such person from any administrative action against the license or
certificate of such person, civil liability or criminal penalty under
the laws of this State arising out of the methods, acts or practices
found unfair or deceptive.
790.10. The commissioner shall, from time to time as conditions
warrant, after notice and public hearing, promulgate reasonable rules
and regulations, and amendments and additions thereto, as are
necessary to administer this article.
790.15. (a) If an insurer or any affiliate of an insurer has failed
to pay any valid claim from Holocaust survivors, the certificate of
authority of the insurer shall be suspended until the insurer, or its
affiliates, pays the claim or claims.
(b) As used in this section:
(1) "Holocaust survivor" means any person who is the beneficiary
of an insurance policy, if the insurance policy insured a person's
life, property, or other interest, and the insured person was killed,
died, was displaced, or was otherwise a victim of persecution of
Jewish and other peoples preceding and during World War II by
Germany, its allies, or sympathizers.
(2) "Beneficiary" means any person or entity entitled to recover
under any policy of insurance, including any named beneficiary, any
heir of a named beneficiary, and any other person entitled to recover
under the policy.
(3) "Claim" means any claim submitted by a Holocaust survivor or
other beneficiary arising under an insurance policy for any loss or
damage caused by or arising because of discriminatory practices or
persecution by the Nazi-controlled German government or its allies,
or by insurers that refused to pay claims because of a claim that
policies of insurance or records were missing or confiscated because
of actions by the Nazi-controlled German government or its agents or
allies. Claim also includes any claim by Holocaust survivors or
beneficiaries to collect proceeds from dowry or education policies or
from annuities.
(4) An "affiliate" of, or person "affiliated" with, a specific
person, means a person who directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
(5) "Control" includes the terms "controlling," "controlled by,"
and "under common control with," and means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, by contract other than a commercial contract for
goods or nonmanagement services, or otherwise, unless the power is
the result of an official position with or corporate office held by
the person. Control shall be presumed to exist if any person,
directly or indirectly, owns, controls, holds with the power to vote,
or holds proxies representing, more than 10 percent of the voting
securities of any other person.
(c) An action to suspend a certificate of authority under this
section shall be conducted in accordance with the Administrative
Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code), except that (1) if
the Office of Administrative Hearings is unable to assign an
administrative law judge to preside over a hearing that commences
within 30 days of the filing of an accusation or order initiating an
action under this section, the administrative law judge may be
appointed by the commissioner; and (2) if the commissioner determines
that it is necessary to protect the interests of Holocaust
survivors, he or she may issue an order of suspension pursuant to
this section prior to holding a hearing.
(d) If the commissioner issues an order pursuant to paragraph (2)
of subdivision (c), he or she shall immediately issue and serve upon
the insurer a statement of reasons for the immediate action, as well
as a copy of the accusation or order containing the allegations that
support the order. Any order issued pursuant to this subdivision
shall include a notice stating the time and place of a hearing on the
order, which shall not be less than 20, nor more than 30 days after
the order is served.
(e) When considering an action to suspend a certificate of
authority under this section, the commissioner shall include
consideration of whether the insurer has participated in good faith
in an international commission on Holocaust survivor insurance
claims, and whether the commission is making meaningful and
expeditious progress toward paying claims to survivors and righting
the historic wrong done to Holocaust victims.
790. The purpose of this article is to regulate trade practices in
the business of insurance in accordance with the intent of Congress
as expressed in the Act of Congress of March 9, 1945 (Public Law 15,
Seventy-ninth Congress), by defining, or providing for the
determination of, all such practices in this State which constitute
unfair methods of competition or unfair or deceptive acts or
practices and by prohibiting the trade practices so defined or
determined.
790.01. This article applies to reciprocal and interinsurance
exchanges, Lloyds insurers, fraternal benefit societies, fraternal
fire insurers, grants and annuities societies, insurers holding
certificates of exemptions, motor clubs, nonprofit hospital
associations, life agents, broker-agents, surplus line brokers and
special lines surplus line brokers as well as all other persons
engaged in the business of insurance.
790.02. No person shall engage in this State in any trade practice
which is defined in this article as, or determined pursuant to this
article to be, an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance.
790.03. The following are hereby defined as unfair methods of
competition and unfair and deceptive acts or practices in the
business of insurance.
(a) Making, issuing, circulating, or causing to be made, issued or
circulated, any estimate, illustration, circular or statement
misrepresenting the terms of any policy issued or to be issued or the
benefits or advantages promised thereby or the dividends or share of
the surplus to be received thereon, or making any false or
misleading statement as to the dividends or share of surplus
previously paid on similar policies, or making any misleading
representation or any misrepresentation as to the financial condition
of any insurer, or as to the legal reserve system upon which any
life insurer operates, or using any name or title of any policy or
class of policies misrepresenting the true nature thereof, or making
any misrepresentation to any policyholder insured in any company for
the purpose of inducing or tending to induce the policyholder to
lapse, forfeit, or surrender his or her insurance.
(b) Making or disseminating or causing to be made or disseminated
before the public in this state, in any newspaper or other
publication, or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatsoever, any
statement containing any assertion, representation or statement with
respect to the business of insurance or with respect to any person in
the conduct of his or her insurance business, which is untrue,
deceptive, or misleading, and which is known, or which by the
exercise of reasonable care should be known, to be untrue, deceptive,
or misleading.
(c) Entering into any agreement to commit, or by any concerted
action committing, any act of boycott, coercion or intimidation
resulting in or tending to result in unreasonable restraint of, or
monopoly in, the business of insurance.
(d) Filing with any supervisory or other public official, or
making, publishing, disseminating, circulating, or delivering to any
person, or placing before the public, or causing directly or
indirectly, to be made, published, disseminated, circulated,
delivered to any person, or placed before the public any false
statement of financial condition of an insurer with intent to
deceive.
(e) Making any false entry in any book, report, or statement of
any insurer with intent to deceive any agent or examiner lawfully
appointed to examine into its condition or into any of its affairs,
or any public official to whom the insurer is required by law to
report, or who has authority by law to examine into its condition or
into any of its affairs, or, with like intent, willfully omitting to
make a true entry of any material fact pertaining to the business of
the insurer in any book, report, or statement of the insurer.
(f) Making or permitting any unfair discrimination between
individuals of the same class and equal expectation of life in the
rates charged for any contract of life insurance or of life annuity
or in the dividends or other benefits payable thereon, or in any
other of the terms and conditions of the contract.
This subdivision shall be interpreted, for any contract of
ordinary life insurance or individual life annuity applied for and
issued on or after January 1, 1981, to require differentials based
upon the sex of the individual insured or annuitant in the rates or
dividends or benefits, or any combination thereof. This requirement
is satisfied if those differentials are substantially supported by
valid pertinent data segregated by sex, including, but not
necessarily limited to, mortality data segregated by sex.
However, for any contract of ordinary life insurance or individual
life annuity applied for and issued on or after January 1, 1981, but
before the compliance date, in lieu of those differentials based on
data segregated by sex, rates, or dividends or benefits, or any
combination thereof, for ordinary life insurance or individual life
annuity on a female life may be calculated as follows: (a) according
to an age not less than three years nor more than six years younger
than the actual age of the female insured or female annuitant, in the
case of a contract of ordinary life insurance with a face value
greater than five thousand dollars ($5,000) or a contract of
individual life annuity; and (b) according to an age not more than
six years younger than the actual age of the female insured, in the
case of a contract of ordinary life insurance with a face value of
five thousand dollars ($5,000) or less. "Compliance date" as used in
this paragraph shall mean the date or dates established as the
operative date or dates by future amendments to this code directing
and authorizing life insurers to use a mortality table containing
mortality data segregated by sex for the calculation of adjusted
premiums and present values for nonforfeiture benefits and valuation
reserves as specified in Sections 10163.5 and 10489.2 or successor
sections.
Notwithstanding the provisions of this subdivision, sex-based
differentials in rates or dividends or benefits, or any combination
thereof, shall not be required for (1) any contract of life insurance
or life annuity issued pursuant to arrangements which may be
considered terms, conditions, or privileges of employment as these
terms are used in Title VII of the Civil Rights Act of 1964 (Public
Law 88-352), as amended, and (2) tax sheltered annuities for
employees of public schools or of tax exempt organizations described
in Section 501(c)(3) of the Internal Revenue Code.
(g) Making or disseminating, or causing to be made or
disseminated, before the public in this state, in any newspaper or
other publication, or any other advertising device, or by public
outcry or proclamation, or in any other manner or means whatever,
whether directly or by implication, any statement that a named
insurer, or named insurers, are members of the California Insurance
Guarantee Association, or insured against insolvency as defined in
Section 119.5. This subdivision shall not be interpreted to prohibit
any activity of the California Insurance Guarantee Association or the
commissioner authorized, directly or by implication, by Article 14.2
(commencing with Section 1063).
(h) Knowingly committing or performing with such frequency as to
indicate a general business practice any of the following unfair
claims settlement practices:
(1) Misrepresenting to claimants pertinent facts or insurance
policy provisions relating to any coverages at issue.
(2) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
policies.
(3) Failing to adopt and implement reasonable standards for the
prompt investigation and processing of claims arising under insurance
policies.
(4) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss requirements have been completed
and submitted by the insured.
(5) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become
reasonably clear.
(6) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by the insureds,
when the insureds have made claims for amounts reasonably similar to
the amounts ultimately recovered.
(7) Attempting to settle a claim by an insured for less than the
amount to which a reasonable person would have believed he or she was
entitled by reference to written or printed advertising material
accompanying or made part of an application.
(8) Attempting to settle claims on the basis of an application
which was altered without notice to, or knowledge or consent of, the
insured, his or her representative, agent, or broker.
(9) Failing, after payment of a claim, to inform insureds or
beneficiaries, upon request by them, of the coverage under which
payment has been made.
(10) Making known to insureds or claimants a practice of the
insurer of appealing from arbitration awards in favor of insureds or
claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration.
(11) Delaying the investigation or payment of claims by requiring
an insured, claimant, or the physician of either, to submit a
preliminary claim report, and then requiring the subsequent
submission of formal proof of loss forms, both of which submissions
contain substantially the same information.
(12) Failing to settle claims promptly, where liability has become
apparent, under one portion of the insurance policy coverage in
order to influence settlements under other portions of the insurance
policy coverage.
(13) Failing to provide promptly a reasonable explanation of the
basis relied on in the insurance policy, in relation to the facts or
applicable law, for the denial of a claim or for the offer of a
compromise settlement.
(14) Directly advising a claimant not to obtain the services of an
attorney.
(15) Misleading a claimant as to the applicable statute of
limitations.
(16) Delaying the payment or provision of hospital, medical, or
surgical benefits for services provided with respect to acquired
immune deficiency syndrome or AIDS-related complex for more than 60
days after the insurer has received a claim for those benefits, where
the delay in claim payment is for the purpose of investigating
whether the condition preexisted the coverage. However, this 60-day
period shall not include any time during which the insurer is
awaiting a response for relevant medical information from a health
care provider.
(i) Canceling or refusing to renew a policy in violation of
Section 676.10.
790.031. The requirements of subdivision (b) of Section 790.034,
and Sections 2071.1 and 10082.3 shall apply only to policies of
residential property insurance as defined in Section 10087, policies
and endorsements containing those coverages prescribed in Chapter 8.5
(commencing with Section 10081) of Part 1 of Division 2, policies
issued by the California Earthquake Authority pursuant to Chapter 8.6
(commencing with Section 10089.5) of Part 1 of Division 2, policies
and endorsements that insure against property damage and are issued
to common interest developments or to associations managing common
interest developments, as those terms are defined in Section 1351 of
the Civil Code, and to policies issued pursuant to Section 120 that
insure against property damage to residential units or contents
thereof owned by one or more persons located in this state.
790.034. (a) Regulations adopted by the commissioner pursuant to
this article that relate to the settlement of claims shall take into
consideration settlement practices by classes of insurers.
(b) (1) Upon receiving notice of a claim, every insurer shall
immediately, but no more than 15 calendar days after receipt of the
claim, provide the insured with a legible reproduction of Section
790.03 of the Insurance Code, in at least 12-point type and a written
notice containing the following:
"In addition to Section 790.03 of the Insurance Code provided
here, Fair Claims Settlement Practices Regulations govern how
insurance claims must be processed in this state. These regulations
are available at the Department of Insurance Internet site,
www.insurance.ca.gov. You may also obtain a copy of these regulations
free of charge from this insurer."
(2) Every insurer shall provide, whether requested orally or in
writing by an insured, a copy of the Fair Claims Settlement Practices
Regulations as set forth in Sections 2695.5, 2695.7, 2695.8, and
2695.9 of subchapter 7.5 of Chapter 5 of Title 10 of the California
Code of Regulations, unless the regulations are inapplicable to that
class of insurer. These regulations shall be provided to the insured
within 15 calendar days of request.
(3) The provisions of this subdivision shall apply to all insurers
except for those that are licensed pursuant to Chapter 1 (commencing
with Section 12340) of Part 6 of Division 2, with respect to
policies and endorsements described in Section 790.031.
790.035. (a) Any person who engages in any unfair method of
competition or any unfair or deceptive act or practice defined in
Section 790.03 is liable to the state for a civil penalty to be fixed
by the commissioner, not to exceed five thousand dollars ($5,000)
for each act, or, if the act or practice was willful, a civil penalty
not to exceed ten thousand dollars ($10,000) for each act. The
commissioner shall have the discretion to establish what constitutes
an act. However, when the issuance, amendment, or servicing of a
policy or endorsement is inadvertent, all of those acts shall be a
single act for the purpose of this section.
(b) The penalty imposed by this section shall be imposed by and
determined by the commissioner as provided by Section 790.05. The
penalty imposed by this section is appealable by means of any remedy
provided by Section 12940 or by Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code.
790.036. (a) It is an unfair and deceptive act or practice in the
business of insurance for an insurer to advertise insurance that it
will not sell.
(b) Nothing in this section shall be construed to prohibit any
insurer from advertising insurance products for which it is licensed
to sell in this state where the product is not available for sale so
long as the unavailability is disclosed in the advertisement.
(c) A violation of this section is subject to the sanctions
provided for by this article.
(d) An intentional violation of this section is a misdemeanor
punishable by a fine not exceeding ten thousand dollars ($10,000).
(e) This section does not apply to any insurer that refuses to
sell a policy of insurance on the basis of its underwriting
guidelines.
(f) This section does not apply to advertisements by an insurer
where the advertisements are broadcast and originate from outside
this state. As used in this subdivision, "broadcast" includes
electronic media, television, and radio. As used in this subdivision,
"originate from outside this state" includes cable transmittal of
programs broadcast by stations located outside California.
790.037. (a) It is an unfair business practice for a health
insurance agent or broker to sell, solicit, or negotiate the purchase
of health insurance by any of the following methods:
(1) The use of a marketing technique known as cold lead
advertising when marketing a Medicare product. As used in this
section, "cold lead advertising" means making use directly or
indirectly of a method of marketing that fails to disclose in a
conspicuous manner that a purpose of the marketing is health
insurance sales solicitation and that contact will be made by a
health insurance agent or broker.
(2) The use of an appointment that was made to discuss a
particular Medicare product or to solicit the sale of a particular
Medicare product in order to solicit the sale of another Medicare
product or other health insurance products, unless the consumer
specifically agrees in advance of the appointment to discuss that
other Medicare product or other types of health insurance products
during the same appointment.
(b) As used in this section, "Medicare product" includes Medicare
Parts A, B, C, and D, and Medicare supplement plans.
790.04. The commissioner shall have power to examine and
investigate into the affairs of every person engaged in the business
of insurance in the State in order to determine whether such person
has been or is engaged in any unfair method of competition or in any
unfair or deceptive act or practice prohibited by Section 790.03 or
determined pursuant to this article to be an unfair method of
competition or an unfair or deceptive practice in the business of
insurance. Such investigation may be conducted pursuant to Article 2
(commencing at Section 11180) of Chapter 2, Part 1, Division 3, Title
2 of the Government Code.
790.05. Whenever the commissioner shall have reason to believe that
a person has been engaged or is engaging in this state in any unfair
method of competition or any unfair or deceptive act or practice
defined in Section 790.03, and that a proceeding by the commissioner
in respect thereto would be to the interest of the public, he or she
shall issue and serve upon that person an order to show cause
containing a statement of the charges in that respect, a statement of
that person's potential liability under Section 790.035, and a
notice of a hearing thereon to be held at a time and place fixed
therein, which shall not be less than 30 days after the service
thereof, for the purpose of determining whether the commissioner
should issue an order to that person to, pay the penalty imposed by
Section 790.035, and to cease and desist those methods, acts, or
practices or any of them.
If the charges or any of them are found to be justified the
commissioner shall issue and cause to be served upon that person an
order requiring that person to pay the penalty imposed by Section
790.035 and to cease and desist from engaging in those methods, acts,
or practices found to be unfair or deceptive.
The hearing shall be conducted in accordance with the
Administrative Procedure Act, Chapter 5 (commencing at Section 11500)
of Part 1 of Division 3 of Title 2 of the Government Code, except
that the hearings may be conducted by an administrative law judge in
the administrative law bureau when the proceedings involve a common
question of law or fact with another proceeding arising under other
Insurance Code sections that may be conducted by administrative law
bureau administrative law judges. The commissioner and the appointed
administrative law judge shall have all the powers granted under the
Administrative Procedure Act.
The person shall be entitled to have the proceedings and the order
reviewed by means of any remedy provided by Section 12940 of this
code or by the Administrative Procedure Act.
790.06. (a) Whenever the commissioner shall have reason to believe
that any person engaged in the business of insurance is engaging in
this state in any method of competition or in any act or practice in
the conduct of the business that is not defined in Section 790.03,
and that the method is unfair or that the act or practice is unfair
or deceptive and that a proceeding by him or her in respect thereto
would be in the interest of the public, he or she may issue and serve
upon that person an order to show cause containing a statement of
the methods, acts or practices alleged to be unfair or deceptive and
a notice of hearing thereon to be held at a time and place fixed
therein, which shall not be less than 30 days after the service
thereof, for the purpose of determining whether the alleged methods,
acts or practices or any of them should be declared to be unfair or
deceptive within the meaning of this article. The order shall specify
the reason why the method of competition is alleged to be unfair or
the act or practice is alleged to be unfair or deceptive.
The hearings provided by this section shall be conducted in
accordance with the Administrative Procedure Act (Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code), except that the hearings may be conducted by
an administrative law judge in the administrative law bureau when the
proceedings involve a common question of law or fact with another
proceeding arising under other Insurance Code sections that may be
conducted by administrative law bureau administrative law judges. The
commissioner and the appointed administrative law judge shall have
all the powers granted under the Administrative Procedure Act. If the
alleged methods, acts, or practices or any of them are found to be
unfair or deceptive within the meaning of this article the
commissioner shall issue and service upon that person his or her
written report so declaring.
(b) If the report charges a violation of this article and if the
method of competition, act or practice has not been discontinued, the
commissioner may, through the Attorney General of this state, at any
time after 30 days after the service of the report cause a petition
to be filed in the superior court of this state within the county
wherein the person resides or has his or her principal place of
business, to enjoin and restrain the person from engaging in the
method, act or practice. The court shall have jurisdiction of the
proceeding and shall have power to make and enter appropriate orders
in connection therewith and to issue any writs as are ancillary to
its jurisdiction or are necessary in its judgment to prevent injury
to the public pendente lite.
(c) A transcript of the proceedings before the commissioner,
including all evidence taken and the report and findings shall be
filed with the petition. If either party shall apply to the court for
leave to adduce additional evidence and shall show, to the
satisfaction of the court, that the additional evidence is material
and there were reasonable grounds for the failure to adduce the
evidence in the proceeding before the commissioner, the court may
order the additional evidence to be taken before the commissioner and
to be adduced upon the hearing in the manner and upon the terms and
conditions as to the court may seem proper. The commissioner may
modify his or her findings of fact or make new findings by reason of
the additional evidence so taken, and shall file modified or new
findings with the return of the additional evidence.
(d) If the court finds that the method of competition complained
of is unfair or that the act or practice complained of is unfair or
deceptive, that the proceeding by the commissioner with respect
thereto is to the interest of the public and that the findings of the
commissioner are supported by the weight of the evidence, it shall
issue its order enjoining and restraining the continuance of the
method of competition, act or practice.
790.07. Whenever the commissioner shall have reason to believe that
any person has violated a cease and desist order issued pursuant to
Section 790.05 or a court order issued pursuant to Section 790.06,
after the order has become final, and while the order is still in
effect, the commissioner may, after a hearing at which it is
determined that the violation was committed, order that person to
forfeit and pay to the State of California a sum not to exceed five
thousand dollars ($5,000) plus any penalty due under Section 790.05,
which may be recovered in a civil action, except that, if the
violation is found to be willful, the amount of the penalty may be a
sum not to exceed fifty-five thousand dollars ($55,000) plus the
penalty due under Section 790.05.
For the purposes of this section, the failure to pay any penalty
imposed pursuant to Section 790.035 which has become final shall
constitute a violation of the cease and desist order.
For any subsequent violation of the cease and desist order or of
the court order or the order to pay the penalty, while the order is
still in effect, the commissioner may, after hearing, suspend or
revoke the license or certificate of that person for a period not
exceeding one year; provided, however, no proceeding shall be based
upon the subsequent violation unless the same was committed or
continued after the date on which the order imposing the penalty
pursuant to the preceding paragraph became final.
The hearings provided by this section shall be conducted in
accordance with the Administrative Procedure Act, except that the
hearings may be conducted by an administrative law judge in the
administrative law bureau when the proceedings involve a common
question of law or fact with another proceeding arising under other
Insurance Code sections that may be conducted by administrative law
bureau administrative law judges. The commissioner and the appointed
administrative law judge shall have all the powers granted under the
Administrative Procedure Act.
The person shall be entitled to have the proceedings and the order
of the commissioner therein reviewed by means of any remedy provided
by Section 12940 or by the Administrative Procedure Act.
790.08. The powers vested in the commissioner in this article shall
be additional to any other powers to enforce any penalties, fines or
forfeitures, denials, suspensions or revocations of licenses or
certificates authorized by law with respect to the methods, acts and
practices hereby declared to be unfair or deceptive.
790.09. No order to cease and desist issued under this article
directed to any person or subsequent administrative or judicial
proceeding to enforce the same shall in any way relieve or absolve
such person from any administrative action against the license or
certificate of such person, civil liability or criminal penalty under
the laws of this State arising out of the methods, acts or practices
found unfair or deceptive.
790.10. The commissioner shall, from time to time as conditions
warrant, after notice and public hearing, promulgate reasonable rules
and regulations, and amendments and additions thereto, as are
necessary to administer this article.
790.15. (a) If an insurer or any affiliate of an insurer has failed
to pay any valid claim from Holocaust survivors, the certificate of
authority of the insurer shall be suspended until the insurer, or its
affiliates, pays the claim or claims.
(b) As used in this section:
(1) "Holocaust survivor" means any person who is the beneficiary
of an insurance policy, if the insurance policy insured a person's
life, property, or other interest, and the insured person was killed,
died, was displaced, or was otherwise a victim of persecution of
Jewish and other peoples preceding and during World War II by
Germany, its allies, or sympathizers.
(2) "Beneficiary" means any person or entity entitled to recover
under any policy of insurance, including any named beneficiary, any
heir of a named beneficiary, and any other person entitled to recover
under the policy.
(3) "Claim" means any claim submitted by a Holocaust survivor or
other beneficiary arising under an insurance policy for any loss or
damage caused by or arising because of discriminatory practices or
persecution by the Nazi-controlled German government or its allies,
or by insurers that refused to pay claims because of a claim that
policies of insurance or records were missing or confiscated because
of actions by the Nazi-controlled German government or its agents or
allies. Claim also includes any claim by Holocaust survivors or
beneficiaries to collect proceeds from dowry or education policies or
from annuities.
(4) An "affiliate" of, or person "affiliated" with, a specific
person, means a person who directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
(5) "Control" includes the terms "controlling," "controlled by,"
and "under common control with," and means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, by contract other than a commercial contract for
goods or nonmanagement services, or otherwise, unless the power is
the result of an official position with or corporate office held by
the person. Control shall be presumed to exist if any person,
directly or indirectly, owns, controls, holds with the power to vote,
or holds proxies representing, more than 10 percent of the voting
securities of any other person.
(c) An action to suspend a certificate of authority under this
section shall be conducted in accordance with the Administrative
Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code), except that (1) if
the Office of Administrative Hearings is unable to assign an
administrative law judge to preside over a hearing that commences
within 30 days of the filing of an accusation or order initiating an
action under this section, the administrative law judge may be
appointed by the commissioner; and (2) if the commissioner determines
that it is necessary to protect the interests of Holocaust
survivors, he or she may issue an order of suspension pursuant to
this section prior to holding a hearing.
(d) If the commissioner issues an order pursuant to paragraph (2)
of subdivision (c), he or she shall immediately issue and serve upon
the insurer a statement of reasons for the immediate action, as well
as a copy of the accusation or order containing the allegations that
support the order. Any order issued pursuant to this subdivision
shall include a notice stating the time and place of a hearing on the
order, which shall not be less than 20, nor more than 30 days after
the order is served.
(e) When considering an action to suspend a certificate of
authority under this section, the commissioner shall include
consideration of whether the insurer has participated in good faith
in an international commission on Holocaust survivor insurance
claims, and whether the commission is making meaningful and
expeditious progress toward paying claims to survivors and righting
the historic wrong done to Holocaust victims.
