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CA Department of Insurance

Formation of an Insurance Company

At the outset, the applicant should address a letter to the Corporate Affairs Bureau of the California Department of Insurance at 45 Fremont Street, 24th Floor, San Francisco, CA 94105, requesting approval of the name under which the applicant intends to transact its business pursuant to the provisions of California Insurance Code Section 881.  An application may list up to three names, in order of preference, and must be accompanied by a filing fee payable to the California Department of Insurance. See the "Name Approval/Change" fee category on the Schedule of Fees and Charges. Name approval requests for domestic companies in the process of formation must be accompanied by a disclosure of the company's principals.

The applicant must file articles of incorporation with the Secretary of State. After the corporation has been formed and duly qualified, it may apply to this Department for an organizational permit so that it can raise the necessary capital to commence its operations. The permit application is an important step in the qualification of the insurer in that it requires detailed biographical information concerning the officers and directors, the contemplated plan of operation of the corporation, a projection of anticipated income and disbursements for a substantial period of years, and other essential data.

The admission procedure involving the licensing of a new insurance company is detailed and time consuming.  In addition to the procedures explained above, it encompasses detailed actuarial and financial studies and projections indicating the company's anticipated income and disbursements over a period of years; it requires detailed field investigation of the background of each officer, director, and key management personnel of the applicant so as to determine their fitness and capability to engage in the insurance business. It includes a detailed description and analysis of the applicant's proposed plan of operation in the State of California, including samples of the contracts which it intends to issue, methods to be employed in the training and recruitment of its sales force, description of the method by which its accounting and bookkeeping records will be maintained so as to provide the periodic statements required by this Department, etc.

California Insurance Code sections which set forth the minimum capital and surplus requirements for every insurer admitted to transact business in California, whether organized under the laws of the State of California or another jurisdiction.

Other essential legal requirements and provisions applicable to a newly formed insurance corporation may be found in the latest edition of the California Insurance Code, in Title 10 of the California Code of Regulations, Sections 2600 through 2613.08, and in California Corporations Code Sections 300 and following.

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