State Codes and Statutes

Statutes > California > Ins > 1724-1736.5

INSURANCE CODE
SECTION 1724-1736.5



1724.  An agent, broker, or solicitor who is not an active member of
the State Bar of California may not share a commission or other
compensation with an active member of the State Bar of California.
For purposes of this section, "commission or other compensation"
means pecuniary or nonpecuniary compensation of any kind relating to
the sale or renewal of an insurance policy or certificate or an
annuity, including, but not limited to, a bonus, gift, prize, award,
or finder's fee.



1724.5.  Every individual and organization licensee and every
applicant for such a license shall file with the commissioner in
writing the true name of the individual or organization and also all
fictitious names under which he conducts or intends to conduct his
business and after licensing shall file with the commissioner any
change in or discontinuance of such names. The commissioner may in
writing disapprove the use of any true or fictitious name (other than
the bona fide natural name of an individual) by any licensee on any
of the following grounds:
   (a) Such name is an interference with or is too similar to a name
already filed and in use by another licensee;
   (b) The use of the name may mislead the public in any respect;
   (c) The name states, infers or implies that the licensee is an
insurer, motor club, hospital service plan or entitled to engage in
insurance activities not permitted under licenses held or applied
for;
   (d) The name states or implies that the licensee is an
underwriter. This subdivision shall not prevent a natural person who
is a life licensee from describing himself as an "underwriter" or
from using the designation "Chartered Life Underwriter" if entitled
thereto nor shall it prevent a natural person who is a fire and
casualty licensee from using the designation "Chartered Property and
Casualty Underwriter" if entitled thereto nor a producers trade
association each member of which is also separately licensed from
having a name containing the word underwriter; or
   (e) The licensee has already filed and not discontinued the use of
more than two names including the true name. This subdivision shall
not prevent a licensee who has lawfully purchased or succeeded to the
business or businesses of other licensees from using for each such
business not more than two additional names, true or fictitious,
consisting of names used by his predecessors in the conduct of such
businesses.
   A licensee may not use a true or fictitious name after being
notified by the commissioner in writing that such use is contrary to
this section. If the commissioner determines that there are facts in
mitigation in connection with the continued use of such name he may
permit its use for a specified reasonable period of time if in
connection therewith he imposes such conditions as will protect the
public and achieve the purposes of this section. Any such permission
and any such conditions shall be written.
   The grounds specified in subdivisions (a), (c), and (d) shall not
be applicable to the true name of any organization licensee which on
October 1, 1961, holds under such name any type of license issued
under this chapter (commencing with Section 1621) or Chapter 8
(commencing with Section 1831) of this part nor to any fictitious
name in use on October 1, 1961, by any individual or organization
holding any type of license issued under this chapter or Chapter 8 of
this part on such date, provided such fictitious name is filed with
the commissioner on or before January 2, 1962.
   The ground specified in subdivisions (b) and (e) shall not be
applicable to any licensee who, or which, on October 1, 1961, holds a
license issued under this chapter or Chapter 8 of this part until on
and after January 2, 1964.


1725.  Every license to act as a fire and casualty broker-agent
shall be prominently displayed by the holder thereof in his or her
office in a manner whereby anyone may readily inspect it and
ascertain both its currency and the capacity in which its holder is
licensed to act.



1725.5.  (a) For purposes of Sections 32.5, 1625, 1626, 1724.5,
1758.1, 1765, 1800, 14020, 14021, and 15006, every licensee shall
prominently affix, type, or cause to be printed on business cards,
written price quotations for insurance products, and print
advertisements distributed exclusively in this state for insurance
products its license number in type the same size as any indicated
telephone number, address, or fax number. If the licensee maintains
more than one organization license, one of the organization license
numbers is sufficient for compliance with this section.
   (b) Effective January 1, 2005, for purposes of Sections 32.5,
1625, 1626, 1724.5, 1758.1, 1765, 1800, 14020, 14021, and 15006,
every licensee shall prominently affix, type, or cause to be printed
on business cards, written price quotations for insurance products,
and print advertisements, distributed in this state for insurance
products, the word "Insurance" in type size no smaller than the
largest indicated telephone number.
   (c) In the case of transactors, or agent and broker licensees, who
are classified for licensing purposes as solicitors, working as
exclusive employees of motor clubs, organizational licensee numbers
shall be used.
   (d) Any person in violation of this section shall be subject to a
fine levied by the commissioner in the amount of two hundred dollars
($200) for the first offense, five hundred dollars ($500) for the
second offense, and one thousand dollars ($1,000) for the third and
subsequent offenses. The penalty shall not exceed one thousand
dollars ($1,000) for any one offense. These fines shall be deposited
into the Insurance Fund.
   (e) A separate penalty shall not be imposed upon each piece of
printed material that fails to conform to the requirements of this
section.
   (f) If the commissioner finds that the failure of a licensee to
comply with the provisions of subdivision (a) or (b) is due to
reasonable cause or circumstance beyond the licensee's control, and
occurred notwithstanding the exercise of ordinary care and in the
absence of willful neglect, the licensee may be relieved of the
penalty in subdivision (d).
   (g) A licensee seeking to be relieved of the penalty in
subdivision (d) shall file with the department a statement with
supporting documents setting forth the facts upon which the licensee
bases its claims for relief.
   (h) This section does not apply to any person or entity that is
not currently required to be licensed by the department or that is
exempted from licensure.
   (i) This section does not apply to general advertisements of motor
clubs that merely list insurance products as one of several services
offered by the motor club, and do not provide any details of the
insurance products.
   (j) This section does not apply to life insurance policy
illustrations required by Chapter 5.5 (commencing with Section
10509.950) of Part 2 of Division 2 or to life insurance cost indexes
required by Chapter 5.6 (commencing with Section 10509.970) of Part 2
of Division 2.
   (k) This section shall become operative January 1, 1997.



1726.  (a) A person who is licensed in this state as an insurance
agent or broker, advertises insurance on the Internet, and transacts
insurance in this state, shall identify all of the following
information on the Internet, regardless of whether the insurance
agent or broker maintains his or her Internet presence or if the
presence is maintained on his or her behalf:
   (1) His or her name as it appears on his or her insurance license,
and any fictitious name approved by the commissioner.
   (2) The state of his or her domicile and principal place of
business.
   (3) His or her license number.
   (b) A person shall be deemed to be transacting insurance in this
state when the person advertises on the Internet, regardless of
whether the insurance agent or broker maintains his or her Internet
presence or if it is maintained on his or her behalf, and does any of
the following:
   (1) Provides an insurance premium quote to a California resident.
   (2) Accepts an application for coverage from a California
resident.
   (3) Communicates with a California resident regarding one or more
terms of an agreement to provide insurance or an insurance policy.



1727.  (a) The commissioner shall, after notice and hearing,
promulgate reasonable rules and regulations specifying the manner and
type of records to be maintained by those licensees acting as
insurance agents and brokers and the location where the records shall
be kept. Those records shall be open to inspection or examination by
the commissioner at all times, and the commissioner may at any time
require the licensee to furnish any information maintained or
required to be maintained in those records.
   (b) Every licensee acting as an insurance agent and broker shall
keep the records as required by the regulations promulgated pursuant
to subdivision (a).
   (c) Every licensee acting as an insurance agent and broker
employing a licensee in the capacity of an insurance solicitor shall
keep the records required by the regulations promulgated pursuant to
subdivision (a) for any insurance transacted by the insurance
solicitor in the capacity of employee of the employing licensee.



1728.  Every resident insurance fire and casualty broker-agent shall
maintain a principal office in this state for the transaction of
business. The address of the office shall, pursuant to Section 1658,
be specified on all applications for license and renewal
applications.



1729.  Every licensee and every applicant for a license shall
immediately notify the commissioner using an electronic service
approved by the commissioner of any change in his or her e-mail,
residence, principal business, or mailing address as given to the
commissioner pursuant to Sections 1658 and 1728.



1729.2.  (a) An applicant or licensee shall notify the commissioner
when any of the background information set forth in this section
changes after the application has been submitted or the license has
been issued. If the licensee is listed as an endorsee on any business
entity license, the licensee shall also provide this notice to any
officer, director, or partner listed on that business entity license.
   (b) A business entity licensee, upon learning of a change in
background information pertaining to any unlicensed person listed on
its business entity license or application therefor, shall notify the
commissioner of that change. The changes subject to this requirement
include changes pertaining to any unlicensed officer, director,
partner, member, or controlling person, or any other natural person
named under the business entity license or in an application
therefor.
   (c) The following definitions apply for the purposes of this
section:
   (1) "License" includes all types of licenses issued by the
commissioner pursuant to Chapter 5 (commencing with Section 1621),
Chapter 5A (commencing with Section 1759), Chapter 6 (commencing with
Section 1760), Chapter 6.5 (commencing with Section 1781.1), Chapter
7 (commencing with Section 1800), and Chapter 8 (commencing with
Section 1831) of Part 2 of Division 1, Chapter 4 (commencing with
Section 12280) of Part 5 of Division 2, and Chapter 1 (commencing
with Section 14000) and Chapter 2 (commencing with Section 15000) of
Division 5.
   (2) "Background information" means any of the following: a
misdemeanor or felony conviction; a filing of felony criminal charges
in state or federal court; an administrative action regarding a
professional or occupational license; any licensee's discharge or
attempt to discharge, in a personal or organizational bankruptcy
proceeding, an obligation regarding any insurance premiums or
fiduciary funds owed to any company, including a premium finance
company, or managing general agent; and any admission, or judicial
finding or determination, of fraud, misappropriation or conversion of
funds, misrepresentation, or breach of fiduciary duty.
   (3) "Applicant" and "licensee" include individual and organization
applicants and licensees, and officers, directors, partners,
members, and controlling persons (as defined in subdivision (b) of
Section 1668.5) of an organization.
   (d) Notification to the commissioner shall be in writing and shall
be sent within 30 days of the date the applicant or licensee learns
of the change in background information.
   (e) The commissioner may adopt regulations necessary or desirable
to implement this section.



1729.5.  A fire and casualty broker-agent or life agent who has a
service contract with a corporation licensed under this code or who
is a stockholder or member of any incorporated association or
corporation organized under the Corporations Code for the purpose of
providing services to fire and casualty broker-agents or life agents
may use the name of such a corporation or association on any
stationery or advertisements and other written or printed matter used
to identify the business of the fire and casualty broker-agent or
life agent provided that the name of the fire and casualty
broker-agent or life agent is clearly identified as bearing only that
relationship to the corporation or association in one of the
following ways:
   "Representing ____;"
   "A stockholder of ____;"
   "Placing business through ____;"
   "Using services of ____."
   The use of the corporation or association name in the manner
provided in this section shall not constitute such use as would
mislead the public within the meaning of Section 1724.5.



1730.  A licensee shall not misrepresent the type of license under
which he is transacting insurance, nor shall he engage in
transactions not authorized by the licenses held by him.



1730.5.  A life agent and a fire and casualty broker-agent shall
provide to all insureds or applicants at the time of application or
receipt of premium moneys the effective date of coverage, if known,
or the circumstances under which coverage will be effective if there
exists conditions precedent to coverage. This section shall apply
only to coverage for personal lines of insurance, such as private
passenger automobile, homeowner and renter insurance, personal
liability, and individual disability and health insurance.



1730.6.  (a) Every fire and casualty broker-agent shall, prior to
arranging premium financing or transacting any agreement for the
periodic payment of premium for any new or renewal policy of
insurance specified in Section 660, disclose to any applicant or
prospective insured any options for premium financing or the periodic
payment of premium from the insurer or, if applicable, the
California Automobile Assigned Risk Plan, that are available for the
insurance being purchased. This disclosure may be in the form of a
written document. In the event the applicant or prospective insured
elects to enter into an agreement for premium financing, the fire and
casualty broker-agent shall comply with the requirements of Section
778.4.
   (b) For purposes of this section and Section 778.4:
   (1) "Periodic payment of premium" means the payment plan provided
by the California Automobile Assigned Risk Plan, or a payment plan
provided by the insurer that allows the total premium to be paid in
more than one installment.
   (2) "Arrange premium financing" means assisting an applicant or
prospective insured to arrange for payment of the premium through a
premium finance agreement as defined in Section 778.1.




1731.  A person licensed as a broker-agent shall be deemed to be
acting as an insurance agent in the transaction of insurance placed
with those insurers for whom a notice of appointment has been filed
with the Insurance Commissioner in accordance with Section 1704 and
is then in force.



1732.  A person acting as an insurance broker may, on behalf of an
insurance company, collect and transmit premium or return premium and
deliver policies and other documents evidencing insurance.
Performance of those functions shall not be construed for any purpose
to mean that the person is an insurance agent.



1733.  All funds received by any person acting as a licensee under
this chapter, Chapter 5A (commencing with Section 1759), Chapter 6
(commencing with Section 1760), or Chapter 7 (commencing with Section
1800), as premium or return premium on or under any policy of
insurance or undertaking of bail, are received and held by that
person in his or her fiduciary capacity. Any such person who diverts
or appropriates those fiduciary funds to his or her own use is guilty
of theft and punishable for theft as provided by law. Any premium
that a premium financer agrees to advance pursuant to the terms of a
premium finance agreement shall constitute fiduciary funds as defined
in this section only if actually received by a person licensed in
one or more of the capacities herein specified.



1734.  This section applies to any person licensed, whether under a
permanent license, restricted license, temporary license, or
certificate of convenience, to act in any of the capacities specified
in Section 1733. If fiduciary funds, as defined in Section 1733, are
received by such person, he shall:
   (a) Remit premiums, less commissions, and return premiums received
or held by him to the insurer or the person entitled thereto, or
   (b) Maintain such fiduciary funds on California business at all
times in a trustee bank account or depository in California separate
from any other account or depository, in an amount at least equal to
the premiums and return premiums, net of commissions, received by him
and unpaid to the persons entitled thereto or, at their direction or
pursuant to written contract, for the account of such persons. As
used in this section, "trustee bank account or depository" includes
but is not limited to a checking account, demand account, or savings
account, each of which shall be designated as a trust account.
However, such person may commingle with such fiduciary funds in such
account or depository such additional funds as he may deem prudent
for the purpose of advancing premiums, establishing reserves for the
paying of return commissions or for such contingencies as may arise
in his business of receiving and transmitting premium or return
premium funds, or
   (c) Maintain such fiduciary funds pursuant to Section 1734.5.



1734.5.  (a) (1) If fiduciary funds, as defined in Section 1733, are
received by any person licensed, whether under a permanent license,
restricted license, temporary license, or certificate of convenience,
to act in any of the capacities specified in Section 1733, and the
funds are not remitted, or maintained pursuant to subdivisions (a)
and (b) of Section 1734, the funds shall be maintained in any of the
following:
   (A) United States government bonds and treasury certificates or
other obligations for which the full faith and credit of the United
States are pledged for payment of principal and interest.
   (B) Certificates of deposit of banks or savings and loan
associations licensed by any state government within the United
States, or the United States government.
   (C) Repurchase agreements collateralized by securities issued by
the United States government.
   (D) Either of the following:
   (i) Bonds and other obligations of this state or of any local
agency or district of the State of California having the power,
without limit as to rate or amount, to levy taxes or assessments upon
all property within its boundaries subject to taxation or assessment
by the local agency or district to pay the principal and interest of
the obligations.
   (ii) Revenue bonds and other obligations payable solely out of the
revenues from a revenue-producing property owned, controlled, or
operated by this state, or a local agency or district or by a
department, board, agency, or authority thereof.
   (2) The bonds and obligations described in subparagraph (D) of
paragraph (1) shall either have maturities of not more than one year
or afford the holder of the obligation the unilateral right to redeem
the obligation from its issuer within one year from date of purchase
at an amount equal to or greater than its par value, and the bonds
and obligations shall be required to be rated at least Aa1,
MIG-1/VMIG-1, or Prime-1 by Moody's Investor Service, Inc., or AA,
SP-1, or A-1 by Standard and Poor's Corporation.
   (3) For the fiduciary funds maintained as provided in paragraph
(1), the bonds, certificates, obligations, certificates of deposit,
and repurchase agreements shall be valued on the basis of their
acquisition cost.
   (b) As a condition to maintaining the fiduciary funds pursuant to
this section, a written agreement shall be obtained from each and
every insurer or person entitled thereto authorizing the maintenance
and the retention of any earnings accruing on the funds.
   (c) Evidence of the funds shall be maintained on California
business by a bank, as defined in Section 102 of the Financial Code,
or a savings association, as defined in Section 143 or 5102 of the
Financial Code, in a custodian or trust account in California,
separate from any other funds, in an amount at least equal to the
premiums and return premiums, net of commissions received by him or
her and unpaid to the persons entitled thereto, or, at their
discretion or pursuant to a written contract, for the account of
these persons. However, the person may commingle with the fiduciary
funds any additional funds as he or she may deem prudent for the
purpose of advancing premiums, establishing reserves for the paying
of return premiums, or for any contingencies that may arise in his or
her business of receiving and transmitting premium or return premium
funds.
   (d) The commissioner shall not have jurisdiction over any disputes
arising between parties concerning the maintenance of fiduciary
funds pursuant to this section. However, this subdivision shall not
otherwise affect the authority granted to the commissioner over
fiduciary funds by other provisions of this code, or regulations
adopted pursuant thereto. As used in this subdivision, "parties"
shall not include the commissioner.
   (e) Investment losses to the principal of fiduciary funds
maintained pursuant to this section are the responsibility of the
person licensed, whether under a permanent license, restricted
license, temporary license, or certificate of convenience, to act in
any of the capacities specified in Section 1733, and any obligation
to insurers or other persons entitled to the fiduciary funds shall in
no way be diminished due to any loss in the value to the principal
of the fiduciary funds held pursuant to this section.




1735.  (a) As used in this section, a managing general agent is a
licensed fire and casualty broker-agent or a life agent to whom all
of the following apply:
   (1) Has a written management contract and an appointment on file
with the commissioner in accordance with Section 1704, which
appointment is then in force, with one or more admitted insurers
covering business transacted by the insurer in a substantial portion
of the State of California.
   (2) Under the contract specified in paragraph (1), manages the
transaction of either all or one or more of the classes of insurance
written by those insurers in that territory or the transactions
therein by those insurers under a specified fictitious underwriter's
name.
   (3) Has the power to appoint, supervise, and terminate the
appointment of local agents in that territory.
   (4) Has the power to accept or decline risks.
   (5) Collects premium moneys from producing broker-agents and
remits those moneys to those insurers pursuant to the account current
system.
   (b) The managing general agent shall, with respect to any
principals for whom fiduciary funds are held, comply with Section
1734.



1735.5.  A fire and casualty broker-agent or surplus line broker may
offset funds due an insured for return premiums on any policy
against amounts due him or her from the same insured for unpaid
premiums on the same or any other policy. Any insurer may pay return
premiums to any fire and casualty broker-agent for that purpose. This
section shall not invalidate an assignment of return premium made
concurrently with policy issuance as security for financing that
premium, nor the right of the assignee, or his or her assign, to
enforce the assignment as a prior claim.



1736.  If any acts are forbidden or conduct prescribed by any
provisions of this code, such acts shall not be performed and such
conduct shall be followed by both the organization and by any person
named to exercise the power and perform the duties under any license
issued to such organization.



1736.5.  (a) Every licensee and applicant shall promptly reply in
writing to an inquiry from the commissioner relative to an
application for, or the retention or renewal of, a license, or an
investigation relating to a consumer complaint or a matter relating
to a producer licensing background change reporting requirement under
Section 1729.2. The commissioner may revoke, suspend, or refuse to
issue or renew a license if the licensee or applicant does not
promptly reply in writing to an inquiry from the commissioner.
   (b) For purposes of this section, "promptly reply" means to
provide a written response to the inquiry that is received by the
commissioner no later than 21 days after the date the inquiry was
mailed or otherwise communicated to the applicant or licensee.
   (c) For purposes of this section, the term "licensee" and
"applicant" have the same definitions as those contained in paragraph
(3) of subdivision (c) of Section 1729.2, and the licenses covered
by this section are the same as those covered by paragraph (1) of
subdivision (c) of Section 1729.2.


State Codes and Statutes

Statutes > California > Ins > 1724-1736.5

INSURANCE CODE
SECTION 1724-1736.5



1724.  An agent, broker, or solicitor who is not an active member of
the State Bar of California may not share a commission or other
compensation with an active member of the State Bar of California.
For purposes of this section, "commission or other compensation"
means pecuniary or nonpecuniary compensation of any kind relating to
the sale or renewal of an insurance policy or certificate or an
annuity, including, but not limited to, a bonus, gift, prize, award,
or finder's fee.



1724.5.  Every individual and organization licensee and every
applicant for such a license shall file with the commissioner in
writing the true name of the individual or organization and also all
fictitious names under which he conducts or intends to conduct his
business and after licensing shall file with the commissioner any
change in or discontinuance of such names. The commissioner may in
writing disapprove the use of any true or fictitious name (other than
the bona fide natural name of an individual) by any licensee on any
of the following grounds:
   (a) Such name is an interference with or is too similar to a name
already filed and in use by another licensee;
   (b) The use of the name may mislead the public in any respect;
   (c) The name states, infers or implies that the licensee is an
insurer, motor club, hospital service plan or entitled to engage in
insurance activities not permitted under licenses held or applied
for;
   (d) The name states or implies that the licensee is an
underwriter. This subdivision shall not prevent a natural person who
is a life licensee from describing himself as an "underwriter" or
from using the designation "Chartered Life Underwriter" if entitled
thereto nor shall it prevent a natural person who is a fire and
casualty licensee from using the designation "Chartered Property and
Casualty Underwriter" if entitled thereto nor a producers trade
association each member of which is also separately licensed from
having a name containing the word underwriter; or
   (e) The licensee has already filed and not discontinued the use of
more than two names including the true name. This subdivision shall
not prevent a licensee who has lawfully purchased or succeeded to the
business or businesses of other licensees from using for each such
business not more than two additional names, true or fictitious,
consisting of names used by his predecessors in the conduct of such
businesses.
   A licensee may not use a true or fictitious name after being
notified by the commissioner in writing that such use is contrary to
this section. If the commissioner determines that there are facts in
mitigation in connection with the continued use of such name he may
permit its use for a specified reasonable period of time if in
connection therewith he imposes such conditions as will protect the
public and achieve the purposes of this section. Any such permission
and any such conditions shall be written.
   The grounds specified in subdivisions (a), (c), and (d) shall not
be applicable to the true name of any organization licensee which on
October 1, 1961, holds under such name any type of license issued
under this chapter (commencing with Section 1621) or Chapter 8
(commencing with Section 1831) of this part nor to any fictitious
name in use on October 1, 1961, by any individual or organization
holding any type of license issued under this chapter or Chapter 8 of
this part on such date, provided such fictitious name is filed with
the commissioner on or before January 2, 1962.
   The ground specified in subdivisions (b) and (e) shall not be
applicable to any licensee who, or which, on October 1, 1961, holds a
license issued under this chapter or Chapter 8 of this part until on
and after January 2, 1964.


1725.  Every license to act as a fire and casualty broker-agent
shall be prominently displayed by the holder thereof in his or her
office in a manner whereby anyone may readily inspect it and
ascertain both its currency and the capacity in which its holder is
licensed to act.



1725.5.  (a) For purposes of Sections 32.5, 1625, 1626, 1724.5,
1758.1, 1765, 1800, 14020, 14021, and 15006, every licensee shall
prominently affix, type, or cause to be printed on business cards,
written price quotations for insurance products, and print
advertisements distributed exclusively in this state for insurance
products its license number in type the same size as any indicated
telephone number, address, or fax number. If the licensee maintains
more than one organization license, one of the organization license
numbers is sufficient for compliance with this section.
   (b) Effective January 1, 2005, for purposes of Sections 32.5,
1625, 1626, 1724.5, 1758.1, 1765, 1800, 14020, 14021, and 15006,
every licensee shall prominently affix, type, or cause to be printed
on business cards, written price quotations for insurance products,
and print advertisements, distributed in this state for insurance
products, the word "Insurance" in type size no smaller than the
largest indicated telephone number.
   (c) In the case of transactors, or agent and broker licensees, who
are classified for licensing purposes as solicitors, working as
exclusive employees of motor clubs, organizational licensee numbers
shall be used.
   (d) Any person in violation of this section shall be subject to a
fine levied by the commissioner in the amount of two hundred dollars
($200) for the first offense, five hundred dollars ($500) for the
second offense, and one thousand dollars ($1,000) for the third and
subsequent offenses. The penalty shall not exceed one thousand
dollars ($1,000) for any one offense. These fines shall be deposited
into the Insurance Fund.
   (e) A separate penalty shall not be imposed upon each piece of
printed material that fails to conform to the requirements of this
section.
   (f) If the commissioner finds that the failure of a licensee to
comply with the provisions of subdivision (a) or (b) is due to
reasonable cause or circumstance beyond the licensee's control, and
occurred notwithstanding the exercise of ordinary care and in the
absence of willful neglect, the licensee may be relieved of the
penalty in subdivision (d).
   (g) A licensee seeking to be relieved of the penalty in
subdivision (d) shall file with the department a statement with
supporting documents setting forth the facts upon which the licensee
bases its claims for relief.
   (h) This section does not apply to any person or entity that is
not currently required to be licensed by the department or that is
exempted from licensure.
   (i) This section does not apply to general advertisements of motor
clubs that merely list insurance products as one of several services
offered by the motor club, and do not provide any details of the
insurance products.
   (j) This section does not apply to life insurance policy
illustrations required by Chapter 5.5 (commencing with Section
10509.950) of Part 2 of Division 2 or to life insurance cost indexes
required by Chapter 5.6 (commencing with Section 10509.970) of Part 2
of Division 2.
   (k) This section shall become operative January 1, 1997.



1726.  (a) A person who is licensed in this state as an insurance
agent or broker, advertises insurance on the Internet, and transacts
insurance in this state, shall identify all of the following
information on the Internet, regardless of whether the insurance
agent or broker maintains his or her Internet presence or if the
presence is maintained on his or her behalf:
   (1) His or her name as it appears on his or her insurance license,
and any fictitious name approved by the commissioner.
   (2) The state of his or her domicile and principal place of
business.
   (3) His or her license number.
   (b) A person shall be deemed to be transacting insurance in this
state when the person advertises on the Internet, regardless of
whether the insurance agent or broker maintains his or her Internet
presence or if it is maintained on his or her behalf, and does any of
the following:
   (1) Provides an insurance premium quote to a California resident.
   (2) Accepts an application for coverage from a California
resident.
   (3) Communicates with a California resident regarding one or more
terms of an agreement to provide insurance or an insurance policy.



1727.  (a) The commissioner shall, after notice and hearing,
promulgate reasonable rules and regulations specifying the manner and
type of records to be maintained by those licensees acting as
insurance agents and brokers and the location where the records shall
be kept. Those records shall be open to inspection or examination by
the commissioner at all times, and the commissioner may at any time
require the licensee to furnish any information maintained or
required to be maintained in those records.
   (b) Every licensee acting as an insurance agent and broker shall
keep the records as required by the regulations promulgated pursuant
to subdivision (a).
   (c) Every licensee acting as an insurance agent and broker
employing a licensee in the capacity of an insurance solicitor shall
keep the records required by the regulations promulgated pursuant to
subdivision (a) for any insurance transacted by the insurance
solicitor in the capacity of employee of the employing licensee.



1728.  Every resident insurance fire and casualty broker-agent shall
maintain a principal office in this state for the transaction of
business. The address of the office shall, pursuant to Section 1658,
be specified on all applications for license and renewal
applications.



1729.  Every licensee and every applicant for a license shall
immediately notify the commissioner using an electronic service
approved by the commissioner of any change in his or her e-mail,
residence, principal business, or mailing address as given to the
commissioner pursuant to Sections 1658 and 1728.



1729.2.  (a) An applicant or licensee shall notify the commissioner
when any of the background information set forth in this section
changes after the application has been submitted or the license has
been issued. If the licensee is listed as an endorsee on any business
entity license, the licensee shall also provide this notice to any
officer, director, or partner listed on that business entity license.
   (b) A business entity licensee, upon learning of a change in
background information pertaining to any unlicensed person listed on
its business entity license or application therefor, shall notify the
commissioner of that change. The changes subject to this requirement
include changes pertaining to any unlicensed officer, director,
partner, member, or controlling person, or any other natural person
named under the business entity license or in an application
therefor.
   (c) The following definitions apply for the purposes of this
section:
   (1) "License" includes all types of licenses issued by the
commissioner pursuant to Chapter 5 (commencing with Section 1621),
Chapter 5A (commencing with Section 1759), Chapter 6 (commencing with
Section 1760), Chapter 6.5 (commencing with Section 1781.1), Chapter
7 (commencing with Section 1800), and Chapter 8 (commencing with
Section 1831) of Part 2 of Division 1, Chapter 4 (commencing with
Section 12280) of Part 5 of Division 2, and Chapter 1 (commencing
with Section 14000) and Chapter 2 (commencing with Section 15000) of
Division 5.
   (2) "Background information" means any of the following: a
misdemeanor or felony conviction; a filing of felony criminal charges
in state or federal court; an administrative action regarding a
professional or occupational license; any licensee's discharge or
attempt to discharge, in a personal or organizational bankruptcy
proceeding, an obligation regarding any insurance premiums or
fiduciary funds owed to any company, including a premium finance
company, or managing general agent; and any admission, or judicial
finding or determination, of fraud, misappropriation or conversion of
funds, misrepresentation, or breach of fiduciary duty.
   (3) "Applicant" and "licensee" include individual and organization
applicants and licensees, and officers, directors, partners,
members, and controlling persons (as defined in subdivision (b) of
Section 1668.5) of an organization.
   (d) Notification to the commissioner shall be in writing and shall
be sent within 30 days of the date the applicant or licensee learns
of the change in background information.
   (e) The commissioner may adopt regulations necessary or desirable
to implement this section.



1729.5.  A fire and casualty broker-agent or life agent who has a
service contract with a corporation licensed under this code or who
is a stockholder or member of any incorporated association or
corporation organized under the Corporations Code for the purpose of
providing services to fire and casualty broker-agents or life agents
may use the name of such a corporation or association on any
stationery or advertisements and other written or printed matter used
to identify the business of the fire and casualty broker-agent or
life agent provided that the name of the fire and casualty
broker-agent or life agent is clearly identified as bearing only that
relationship to the corporation or association in one of the
following ways:
   "Representing ____;"
   "A stockholder of ____;"
   "Placing business through ____;"
   "Using services of ____."
   The use of the corporation or association name in the manner
provided in this section shall not constitute such use as would
mislead the public within the meaning of Section 1724.5.



1730.  A licensee shall not misrepresent the type of license under
which he is transacting insurance, nor shall he engage in
transactions not authorized by the licenses held by him.



1730.5.  A life agent and a fire and casualty broker-agent shall
provide to all insureds or applicants at the time of application or
receipt of premium moneys the effective date of coverage, if known,
or the circumstances under which coverage will be effective if there
exists conditions precedent to coverage. This section shall apply
only to coverage for personal lines of insurance, such as private
passenger automobile, homeowner and renter insurance, personal
liability, and individual disability and health insurance.



1730.6.  (a) Every fire and casualty broker-agent shall, prior to
arranging premium financing or transacting any agreement for the
periodic payment of premium for any new or renewal policy of
insurance specified in Section 660, disclose to any applicant or
prospective insured any options for premium financing or the periodic
payment of premium from the insurer or, if applicable, the
California Automobile Assigned Risk Plan, that are available for the
insurance being purchased. This disclosure may be in the form of a
written document. In the event the applicant or prospective insured
elects to enter into an agreement for premium financing, the fire and
casualty broker-agent shall comply with the requirements of Section
778.4.
   (b) For purposes of this section and Section 778.4:
   (1) "Periodic payment of premium" means the payment plan provided
by the California Automobile Assigned Risk Plan, or a payment plan
provided by the insurer that allows the total premium to be paid in
more than one installment.
   (2) "Arrange premium financing" means assisting an applicant or
prospective insured to arrange for payment of the premium through a
premium finance agreement as defined in Section 778.1.




1731.  A person licensed as a broker-agent shall be deemed to be
acting as an insurance agent in the transaction of insurance placed
with those insurers for whom a notice of appointment has been filed
with the Insurance Commissioner in accordance with Section 1704 and
is then in force.



1732.  A person acting as an insurance broker may, on behalf of an
insurance company, collect and transmit premium or return premium and
deliver policies and other documents evidencing insurance.
Performance of those functions shall not be construed for any purpose
to mean that the person is an insurance agent.



1733.  All funds received by any person acting as a licensee under
this chapter, Chapter 5A (commencing with Section 1759), Chapter 6
(commencing with Section 1760), or Chapter 7 (commencing with Section
1800), as premium or return premium on or under any policy of
insurance or undertaking of bail, are received and held by that
person in his or her fiduciary capacity. Any such person who diverts
or appropriates those fiduciary funds to his or her own use is guilty
of theft and punishable for theft as provided by law. Any premium
that a premium financer agrees to advance pursuant to the terms of a
premium finance agreement shall constitute fiduciary funds as defined
in this section only if actually received by a person licensed in
one or more of the capacities herein specified.



1734.  This section applies to any person licensed, whether under a
permanent license, restricted license, temporary license, or
certificate of convenience, to act in any of the capacities specified
in Section 1733. If fiduciary funds, as defined in Section 1733, are
received by such person, he shall:
   (a) Remit premiums, less commissions, and return premiums received
or held by him to the insurer or the person entitled thereto, or
   (b) Maintain such fiduciary funds on California business at all
times in a trustee bank account or depository in California separate
from any other account or depository, in an amount at least equal to
the premiums and return premiums, net of commissions, received by him
and unpaid to the persons entitled thereto or, at their direction or
pursuant to written contract, for the account of such persons. As
used in this section, "trustee bank account or depository" includes
but is not limited to a checking account, demand account, or savings
account, each of which shall be designated as a trust account.
However, such person may commingle with such fiduciary funds in such
account or depository such additional funds as he may deem prudent
for the purpose of advancing premiums, establishing reserves for the
paying of return commissions or for such contingencies as may arise
in his business of receiving and transmitting premium or return
premium funds, or
   (c) Maintain such fiduciary funds pursuant to Section 1734.5.



1734.5.  (a) (1) If fiduciary funds, as defined in Section 1733, are
received by any person licensed, whether under a permanent license,
restricted license, temporary license, or certificate of convenience,
to act in any of the capacities specified in Section 1733, and the
funds are not remitted, or maintained pursuant to subdivisions (a)
and (b) of Section 1734, the funds shall be maintained in any of the
following:
   (A) United States government bonds and treasury certificates or
other obligations for which the full faith and credit of the United
States are pledged for payment of principal and interest.
   (B) Certificates of deposit of banks or savings and loan
associations licensed by any state government within the United
States, or the United States government.
   (C) Repurchase agreements collateralized by securities issued by
the United States government.
   (D) Either of the following:
   (i) Bonds and other obligations of this state or of any local
agency or district of the State of California having the power,
without limit as to rate or amount, to levy taxes or assessments upon
all property within its boundaries subject to taxation or assessment
by the local agency or district to pay the principal and interest of
the obligations.
   (ii) Revenue bonds and other obligations payable solely out of the
revenues from a revenue-producing property owned, controlled, or
operated by this state, or a local agency or district or by a
department, board, agency, or authority thereof.
   (2) The bonds and obligations described in subparagraph (D) of
paragraph (1) shall either have maturities of not more than one year
or afford the holder of the obligation the unilateral right to redeem
the obligation from its issuer within one year from date of purchase
at an amount equal to or greater than its par value, and the bonds
and obligations shall be required to be rated at least Aa1,
MIG-1/VMIG-1, or Prime-1 by Moody's Investor Service, Inc., or AA,
SP-1, or A-1 by Standard and Poor's Corporation.
   (3) For the fiduciary funds maintained as provided in paragraph
(1), the bonds, certificates, obligations, certificates of deposit,
and repurchase agreements shall be valued on the basis of their
acquisition cost.
   (b) As a condition to maintaining the fiduciary funds pursuant to
this section, a written agreement shall be obtained from each and
every insurer or person entitled thereto authorizing the maintenance
and the retention of any earnings accruing on the funds.
   (c) Evidence of the funds shall be maintained on California
business by a bank, as defined in Section 102 of the Financial Code,
or a savings association, as defined in Section 143 or 5102 of the
Financial Code, in a custodian or trust account in California,
separate from any other funds, in an amount at least equal to the
premiums and return premiums, net of commissions received by him or
her and unpaid to the persons entitled thereto, or, at their
discretion or pursuant to a written contract, for the account of
these persons. However, the person may commingle with the fiduciary
funds any additional funds as he or she may deem prudent for the
purpose of advancing premiums, establishing reserves for the paying
of return premiums, or for any contingencies that may arise in his or
her business of receiving and transmitting premium or return premium
funds.
   (d) The commissioner shall not have jurisdiction over any disputes
arising between parties concerning the maintenance of fiduciary
funds pursuant to this section. However, this subdivision shall not
otherwise affect the authority granted to the commissioner over
fiduciary funds by other provisions of this code, or regulations
adopted pursuant thereto. As used in this subdivision, "parties"
shall not include the commissioner.
   (e) Investment losses to the principal of fiduciary funds
maintained pursuant to this section are the responsibility of the
person licensed, whether under a permanent license, restricted
license, temporary license, or certificate of convenience, to act in
any of the capacities specified in Section 1733, and any obligation
to insurers or other persons entitled to the fiduciary funds shall in
no way be diminished due to any loss in the value to the principal
of the fiduciary funds held pursuant to this section.




1735.  (a) As used in this section, a managing general agent is a
licensed fire and casualty broker-agent or a life agent to whom all
of the following apply:
   (1) Has a written management contract and an appointment on file
with the commissioner in accordance with Section 1704, which
appointment is then in force, with one or more admitted insurers
covering business transacted by the insurer in a substantial portion
of the State of California.
   (2) Under the contract specified in paragraph (1), manages the
transaction of either all or one or more of the classes of insurance
written by those insurers in that territory or the transactions
therein by those insurers under a specified fictitious underwriter's
name.
   (3) Has the power to appoint, supervise, and terminate the
appointment of local agents in that territory.
   (4) Has the power to accept or decline risks.
   (5) Collects premium moneys from producing broker-agents and
remits those moneys to those insurers pursuant to the account current
system.
   (b) The managing general agent shall, with respect to any
principals for whom fiduciary funds are held, comply with Section
1734.



1735.5.  A fire and casualty broker-agent or surplus line broker may
offset funds due an insured for return premiums on any policy
against amounts due him or her from the same insured for unpaid
premiums on the same or any other policy. Any insurer may pay return
premiums to any fire and casualty broker-agent for that purpose. This
section shall not invalidate an assignment of return premium made
concurrently with policy issuance as security for financing that
premium, nor the right of the assignee, or his or her assign, to
enforce the assignment as a prior claim.



1736.  If any acts are forbidden or conduct prescribed by any
provisions of this code, such acts shall not be performed and such
conduct shall be followed by both the organization and by any person
named to exercise the power and perform the duties under any license
issued to such organization.



1736.5.  (a) Every licensee and applicant shall promptly reply in
writing to an inquiry from the commissioner relative to an
application for, or the retention or renewal of, a license, or an
investigation relating to a consumer complaint or a matter relating
to a producer licensing background change reporting requirement under
Section 1729.2. The commissioner may revoke, suspend, or refuse to
issue or renew a license if the licensee or applicant does not
promptly reply in writing to an inquiry from the commissioner.
   (b) For purposes of this section, "promptly reply" means to
provide a written response to the inquiry that is received by the
commissioner no later than 21 days after the date the inquiry was
mailed or otherwise communicated to the applicant or licensee.
   (c) For purposes of this section, the term "licensee" and
"applicant" have the same definitions as those contained in paragraph
(3) of subdivision (c) of Section 1729.2, and the licenses covered
by this section are the same as those covered by paragraph (1) of
subdivision (c) of Section 1729.2.



State Codes and Statutes

State Codes and Statutes

Statutes > California > Ins > 1724-1736.5

INSURANCE CODE
SECTION 1724-1736.5



1724.  An agent, broker, or solicitor who is not an active member of
the State Bar of California may not share a commission or other
compensation with an active member of the State Bar of California.
For purposes of this section, "commission or other compensation"
means pecuniary or nonpecuniary compensation of any kind relating to
the sale or renewal of an insurance policy or certificate or an
annuity, including, but not limited to, a bonus, gift, prize, award,
or finder's fee.



1724.5.  Every individual and organization licensee and every
applicant for such a license shall file with the commissioner in
writing the true name of the individual or organization and also all
fictitious names under which he conducts or intends to conduct his
business and after licensing shall file with the commissioner any
change in or discontinuance of such names. The commissioner may in
writing disapprove the use of any true or fictitious name (other than
the bona fide natural name of an individual) by any licensee on any
of the following grounds:
   (a) Such name is an interference with or is too similar to a name
already filed and in use by another licensee;
   (b) The use of the name may mislead the public in any respect;
   (c) The name states, infers or implies that the licensee is an
insurer, motor club, hospital service plan or entitled to engage in
insurance activities not permitted under licenses held or applied
for;
   (d) The name states or implies that the licensee is an
underwriter. This subdivision shall not prevent a natural person who
is a life licensee from describing himself as an "underwriter" or
from using the designation "Chartered Life Underwriter" if entitled
thereto nor shall it prevent a natural person who is a fire and
casualty licensee from using the designation "Chartered Property and
Casualty Underwriter" if entitled thereto nor a producers trade
association each member of which is also separately licensed from
having a name containing the word underwriter; or
   (e) The licensee has already filed and not discontinued the use of
more than two names including the true name. This subdivision shall
not prevent a licensee who has lawfully purchased or succeeded to the
business or businesses of other licensees from using for each such
business not more than two additional names, true or fictitious,
consisting of names used by his predecessors in the conduct of such
businesses.
   A licensee may not use a true or fictitious name after being
notified by the commissioner in writing that such use is contrary to
this section. If the commissioner determines that there are facts in
mitigation in connection with the continued use of such name he may
permit its use for a specified reasonable period of time if in
connection therewith he imposes such conditions as will protect the
public and achieve the purposes of this section. Any such permission
and any such conditions shall be written.
   The grounds specified in subdivisions (a), (c), and (d) shall not
be applicable to the true name of any organization licensee which on
October 1, 1961, holds under such name any type of license issued
under this chapter (commencing with Section 1621) or Chapter 8
(commencing with Section 1831) of this part nor to any fictitious
name in use on October 1, 1961, by any individual or organization
holding any type of license issued under this chapter or Chapter 8 of
this part on such date, provided such fictitious name is filed with
the commissioner on or before January 2, 1962.
   The ground specified in subdivisions (b) and (e) shall not be
applicable to any licensee who, or which, on October 1, 1961, holds a
license issued under this chapter or Chapter 8 of this part until on
and after January 2, 1964.


1725.  Every license to act as a fire and casualty broker-agent
shall be prominently displayed by the holder thereof in his or her
office in a manner whereby anyone may readily inspect it and
ascertain both its currency and the capacity in which its holder is
licensed to act.



1725.5.  (a) For purposes of Sections 32.5, 1625, 1626, 1724.5,
1758.1, 1765, 1800, 14020, 14021, and 15006, every licensee shall
prominently affix, type, or cause to be printed on business cards,
written price quotations for insurance products, and print
advertisements distributed exclusively in this state for insurance
products its license number in type the same size as any indicated
telephone number, address, or fax number. If the licensee maintains
more than one organization license, one of the organization license
numbers is sufficient for compliance with this section.
   (b) Effective January 1, 2005, for purposes of Sections 32.5,
1625, 1626, 1724.5, 1758.1, 1765, 1800, 14020, 14021, and 15006,
every licensee shall prominently affix, type, or cause to be printed
on business cards, written price quotations for insurance products,
and print advertisements, distributed in this state for insurance
products, the word "Insurance" in type size no smaller than the
largest indicated telephone number.
   (c) In the case of transactors, or agent and broker licensees, who
are classified for licensing purposes as solicitors, working as
exclusive employees of motor clubs, organizational licensee numbers
shall be used.
   (d) Any person in violation of this section shall be subject to a
fine levied by the commissioner in the amount of two hundred dollars
($200) for the first offense, five hundred dollars ($500) for the
second offense, and one thousand dollars ($1,000) for the third and
subsequent offenses. The penalty shall not exceed one thousand
dollars ($1,000) for any one offense. These fines shall be deposited
into the Insurance Fund.
   (e) A separate penalty shall not be imposed upon each piece of
printed material that fails to conform to the requirements of this
section.
   (f) If the commissioner finds that the failure of a licensee to
comply with the provisions of subdivision (a) or (b) is due to
reasonable cause or circumstance beyond the licensee's control, and
occurred notwithstanding the exercise of ordinary care and in the
absence of willful neglect, the licensee may be relieved of the
penalty in subdivision (d).
   (g) A licensee seeking to be relieved of the penalty in
subdivision (d) shall file with the department a statement with
supporting documents setting forth the facts upon which the licensee
bases its claims for relief.
   (h) This section does not apply to any person or entity that is
not currently required to be licensed by the department or that is
exempted from licensure.
   (i) This section does not apply to general advertisements of motor
clubs that merely list insurance products as one of several services
offered by the motor club, and do not provide any details of the
insurance products.
   (j) This section does not apply to life insurance policy
illustrations required by Chapter 5.5 (commencing with Section
10509.950) of Part 2 of Division 2 or to life insurance cost indexes
required by Chapter 5.6 (commencing with Section 10509.970) of Part 2
of Division 2.
   (k) This section shall become operative January 1, 1997.



1726.  (a) A person who is licensed in this state as an insurance
agent or broker, advertises insurance on the Internet, and transacts
insurance in this state, shall identify all of the following
information on the Internet, regardless of whether the insurance
agent or broker maintains his or her Internet presence or if the
presence is maintained on his or her behalf:
   (1) His or her name as it appears on his or her insurance license,
and any fictitious name approved by the commissioner.
   (2) The state of his or her domicile and principal place of
business.
   (3) His or her license number.
   (b) A person shall be deemed to be transacting insurance in this
state when the person advertises on the Internet, regardless of
whether the insurance agent or broker maintains his or her Internet
presence or if it is maintained on his or her behalf, and does any of
the following:
   (1) Provides an insurance premium quote to a California resident.
   (2) Accepts an application for coverage from a California
resident.
   (3) Communicates with a California resident regarding one or more
terms of an agreement to provide insurance or an insurance policy.



1727.  (a) The commissioner shall, after notice and hearing,
promulgate reasonable rules and regulations specifying the manner and
type of records to be maintained by those licensees acting as
insurance agents and brokers and the location where the records shall
be kept. Those records shall be open to inspection or examination by
the commissioner at all times, and the commissioner may at any time
require the licensee to furnish any information maintained or
required to be maintained in those records.
   (b) Every licensee acting as an insurance agent and broker shall
keep the records as required by the regulations promulgated pursuant
to subdivision (a).
   (c) Every licensee acting as an insurance agent and broker
employing a licensee in the capacity of an insurance solicitor shall
keep the records required by the regulations promulgated pursuant to
subdivision (a) for any insurance transacted by the insurance
solicitor in the capacity of employee of the employing licensee.



1728.  Every resident insurance fire and casualty broker-agent shall
maintain a principal office in this state for the transaction of
business. The address of the office shall, pursuant to Section 1658,
be specified on all applications for license and renewal
applications.



1729.  Every licensee and every applicant for a license shall
immediately notify the commissioner using an electronic service
approved by the commissioner of any change in his or her e-mail,
residence, principal business, or mailing address as given to the
commissioner pursuant to Sections 1658 and 1728.



1729.2.  (a) An applicant or licensee shall notify the commissioner
when any of the background information set forth in this section
changes after the application has been submitted or the license has
been issued. If the licensee is listed as an endorsee on any business
entity license, the licensee shall also provide this notice to any
officer, director, or partner listed on that business entity license.
   (b) A business entity licensee, upon learning of a change in
background information pertaining to any unlicensed person listed on
its business entity license or application therefor, shall notify the
commissioner of that change. The changes subject to this requirement
include changes pertaining to any unlicensed officer, director,
partner, member, or controlling person, or any other natural person
named under the business entity license or in an application
therefor.
   (c) The following definitions apply for the purposes of this
section:
   (1) "License" includes all types of licenses issued by the
commissioner pursuant to Chapter 5 (commencing with Section 1621),
Chapter 5A (commencing with Section 1759), Chapter 6 (commencing with
Section 1760), Chapter 6.5 (commencing with Section 1781.1), Chapter
7 (commencing with Section 1800), and Chapter 8 (commencing with
Section 1831) of Part 2 of Division 1, Chapter 4 (commencing with
Section 12280) of Part 5 of Division 2, and Chapter 1 (commencing
with Section 14000) and Chapter 2 (commencing with Section 15000) of
Division 5.
   (2) "Background information" means any of the following: a
misdemeanor or felony conviction; a filing of felony criminal charges
in state or federal court; an administrative action regarding a
professional or occupational license; any licensee's discharge or
attempt to discharge, in a personal or organizational bankruptcy
proceeding, an obligation regarding any insurance premiums or
fiduciary funds owed to any company, including a premium finance
company, or managing general agent; and any admission, or judicial
finding or determination, of fraud, misappropriation or conversion of
funds, misrepresentation, or breach of fiduciary duty.
   (3) "Applicant" and "licensee" include individual and organization
applicants and licensees, and officers, directors, partners,
members, and controlling persons (as defined in subdivision (b) of
Section 1668.5) of an organization.
   (d) Notification to the commissioner shall be in writing and shall
be sent within 30 days of the date the applicant or licensee learns
of the change in background information.
   (e) The commissioner may adopt regulations necessary or desirable
to implement this section.



1729.5.  A fire and casualty broker-agent or life agent who has a
service contract with a corporation licensed under this code or who
is a stockholder or member of any incorporated association or
corporation organized under the Corporations Code for the purpose of
providing services to fire and casualty broker-agents or life agents
may use the name of such a corporation or association on any
stationery or advertisements and other written or printed matter used
to identify the business of the fire and casualty broker-agent or
life agent provided that the name of the fire and casualty
broker-agent or life agent is clearly identified as bearing only that
relationship to the corporation or association in one of the
following ways:
   "Representing ____;"
   "A stockholder of ____;"
   "Placing business through ____;"
   "Using services of ____."
   The use of the corporation or association name in the manner
provided in this section shall not constitute such use as would
mislead the public within the meaning of Section 1724.5.



1730.  A licensee shall not misrepresent the type of license under
which he is transacting insurance, nor shall he engage in
transactions not authorized by the licenses held by him.



1730.5.  A life agent and a fire and casualty broker-agent shall
provide to all insureds or applicants at the time of application or
receipt of premium moneys the effective date of coverage, if known,
or the circumstances under which coverage will be effective if there
exists conditions precedent to coverage. This section shall apply
only to coverage for personal lines of insurance, such as private
passenger automobile, homeowner and renter insurance, personal
liability, and individual disability and health insurance.



1730.6.  (a) Every fire and casualty broker-agent shall, prior to
arranging premium financing or transacting any agreement for the
periodic payment of premium for any new or renewal policy of
insurance specified in Section 660, disclose to any applicant or
prospective insured any options for premium financing or the periodic
payment of premium from the insurer or, if applicable, the
California Automobile Assigned Risk Plan, that are available for the
insurance being purchased. This disclosure may be in the form of a
written document. In the event the applicant or prospective insured
elects to enter into an agreement for premium financing, the fire and
casualty broker-agent shall comply with the requirements of Section
778.4.
   (b) For purposes of this section and Section 778.4:
   (1) "Periodic payment of premium" means the payment plan provided
by the California Automobile Assigned Risk Plan, or a payment plan
provided by the insurer that allows the total premium to be paid in
more than one installment.
   (2) "Arrange premium financing" means assisting an applicant or
prospective insured to arrange for payment of the premium through a
premium finance agreement as defined in Section 778.1.




1731.  A person licensed as a broker-agent shall be deemed to be
acting as an insurance agent in the transaction of insurance placed
with those insurers for whom a notice of appointment has been filed
with the Insurance Commissioner in accordance with Section 1704 and
is then in force.



1732.  A person acting as an insurance broker may, on behalf of an
insurance company, collect and transmit premium or return premium and
deliver policies and other documents evidencing insurance.
Performance of those functions shall not be construed for any purpose
to mean that the person is an insurance agent.



1733.  All funds received by any person acting as a licensee under
this chapter, Chapter 5A (commencing with Section 1759), Chapter 6
(commencing with Section 1760), or Chapter 7 (commencing with Section
1800), as premium or return premium on or under any policy of
insurance or undertaking of bail, are received and held by that
person in his or her fiduciary capacity. Any such person who diverts
or appropriates those fiduciary funds to his or her own use is guilty
of theft and punishable for theft as provided by law. Any premium
that a premium financer agrees to advance pursuant to the terms of a
premium finance agreement shall constitute fiduciary funds as defined
in this section only if actually received by a person licensed in
one or more of the capacities herein specified.



1734.  This section applies to any person licensed, whether under a
permanent license, restricted license, temporary license, or
certificate of convenience, to act in any of the capacities specified
in Section 1733. If fiduciary funds, as defined in Section 1733, are
received by such person, he shall:
   (a) Remit premiums, less commissions, and return premiums received
or held by him to the insurer or the person entitled thereto, or
   (b) Maintain such fiduciary funds on California business at all
times in a trustee bank account or depository in California separate
from any other account or depository, in an amount at least equal to
the premiums and return premiums, net of commissions, received by him
and unpaid to the persons entitled thereto or, at their direction or
pursuant to written contract, for the account of such persons. As
used in this section, "trustee bank account or depository" includes
but is not limited to a checking account, demand account, or savings
account, each of which shall be designated as a trust account.
However, such person may commingle with such fiduciary funds in such
account or depository such additional funds as he may deem prudent
for the purpose of advancing premiums, establishing reserves for the
paying of return commissions or for such contingencies as may arise
in his business of receiving and transmitting premium or return
premium funds, or
   (c) Maintain such fiduciary funds pursuant to Section 1734.5.



1734.5.  (a) (1) If fiduciary funds, as defined in Section 1733, are
received by any person licensed, whether under a permanent license,
restricted license, temporary license, or certificate of convenience,
to act in any of the capacities specified in Section 1733, and the
funds are not remitted, or maintained pursuant to subdivisions (a)
and (b) of Section 1734, the funds shall be maintained in any of the
following:
   (A) United States government bonds and treasury certificates or
other obligations for which the full faith and credit of the United
States are pledged for payment of principal and interest.
   (B) Certificates of deposit of banks or savings and loan
associations licensed by any state government within the United
States, or the United States government.
   (C) Repurchase agreements collateralized by securities issued by
the United States government.
   (D) Either of the following:
   (i) Bonds and other obligations of this state or of any local
agency or district of the State of California having the power,
without limit as to rate or amount, to levy taxes or assessments upon
all property within its boundaries subject to taxation or assessment
by the local agency or district to pay the principal and interest of
the obligations.
   (ii) Revenue bonds and other obligations payable solely out of the
revenues from a revenue-producing property owned, controlled, or
operated by this state, or a local agency or district or by a
department, board, agency, or authority thereof.
   (2) The bonds and obligations described in subparagraph (D) of
paragraph (1) shall either have maturities of not more than one year
or afford the holder of the obligation the unilateral right to redeem
the obligation from its issuer within one year from date of purchase
at an amount equal to or greater than its par value, and the bonds
and obligations shall be required to be rated at least Aa1,
MIG-1/VMIG-1, or Prime-1 by Moody's Investor Service, Inc., or AA,
SP-1, or A-1 by Standard and Poor's Corporation.
   (3) For the fiduciary funds maintained as provided in paragraph
(1), the bonds, certificates, obligations, certificates of deposit,
and repurchase agreements shall be valued on the basis of their
acquisition cost.
   (b) As a condition to maintaining the fiduciary funds pursuant to
this section, a written agreement shall be obtained from each and
every insurer or person entitled thereto authorizing the maintenance
and the retention of any earnings accruing on the funds.
   (c) Evidence of the funds shall be maintained on California
business by a bank, as defined in Section 102 of the Financial Code,
or a savings association, as defined in Section 143 or 5102 of the
Financial Code, in a custodian or trust account in California,
separate from any other funds, in an amount at least equal to the
premiums and return premiums, net of commissions received by him or
her and unpaid to the persons entitled thereto, or, at their
discretion or pursuant to a written contract, for the account of
these persons. However, the person may commingle with the fiduciary
funds any additional funds as he or she may deem prudent for the
purpose of advancing premiums, establishing reserves for the paying
of return premiums, or for any contingencies that may arise in his or
her business of receiving and transmitting premium or return premium
funds.
   (d) The commissioner shall not have jurisdiction over any disputes
arising between parties concerning the maintenance of fiduciary
funds pursuant to this section. However, this subdivision shall not
otherwise affect the authority granted to the commissioner over
fiduciary funds by other provisions of this code, or regulations
adopted pursuant thereto. As used in this subdivision, "parties"
shall not include the commissioner.
   (e) Investment losses to the principal of fiduciary funds
maintained pursuant to this section are the responsibility of the
person licensed, whether under a permanent license, restricted
license, temporary license, or certificate of convenience, to act in
any of the capacities specified in Section 1733, and any obligation
to insurers or other persons entitled to the fiduciary funds shall in
no way be diminished due to any loss in the value to the principal
of the fiduciary funds held pursuant to this section.




1735.  (a) As used in this section, a managing general agent is a
licensed fire and casualty broker-agent or a life agent to whom all
of the following apply:
   (1) Has a written management contract and an appointment on file
with the commissioner in accordance with Section 1704, which
appointment is then in force, with one or more admitted insurers
covering business transacted by the insurer in a substantial portion
of the State of California.
   (2) Under the contract specified in paragraph (1), manages the
transaction of either all or one or more of the classes of insurance
written by those insurers in that territory or the transactions
therein by those insurers under a specified fictitious underwriter's
name.
   (3) Has the power to appoint, supervise, and terminate the
appointment of local agents in that territory.
   (4) Has the power to accept or decline risks.
   (5) Collects premium moneys from producing broker-agents and
remits those moneys to those insurers pursuant to the account current
system.
   (b) The managing general agent shall, with respect to any
principals for whom fiduciary funds are held, comply with Section
1734.



1735.5.  A fire and casualty broker-agent or surplus line broker may
offset funds due an insured for return premiums on any policy
against amounts due him or her from the same insured for unpaid
premiums on the same or any other policy. Any insurer may pay return
premiums to any fire and casualty broker-agent for that purpose. This
section shall not invalidate an assignment of return premium made
concurrently with policy issuance as security for financing that
premium, nor the right of the assignee, or his or her assign, to
enforce the assignment as a prior claim.



1736.  If any acts are forbidden or conduct prescribed by any
provisions of this code, such acts shall not be performed and such
conduct shall be followed by both the organization and by any person
named to exercise the power and perform the duties under any license
issued to such organization.



1736.5.  (a) Every licensee and applicant shall promptly reply in
writing to an inquiry from the commissioner relative to an
application for, or the retention or renewal of, a license, or an
investigation relating to a consumer complaint or a matter relating
to a producer licensing background change reporting requirement under
Section 1729.2. The commissioner may revoke, suspend, or refuse to
issue or renew a license if the licensee or applicant does not
promptly reply in writing to an inquiry from the commissioner.
   (b) For purposes of this section, "promptly reply" means to
provide a written response to the inquiry that is received by the
commissioner no later than 21 days after the date the inquiry was
mailed or otherwise communicated to the applicant or licensee.
   (c) For purposes of this section, the term "licensee" and
"applicant" have the same definitions as those contained in paragraph
(3) of subdivision (c) of Section 1729.2, and the licenses covered
by this section are the same as those covered by paragraph (1) of
subdivision (c) of Section 1729.2.