(Revised December 2012)
The CDI ensures that consumers are protected; that the insurance marketplace is fostered to be vibrant and stable; that the regulatory process is maintained as open and equitable;and that the law is enforced fairly and impartially.
First created in 1868, the California Department of Insurance (CDI) has undergone many changes in its history. In 1988 California voters passed Proposition 103, and the CDI's authority and responsibility was significantly broadened in the property and casualty area. Proposition 103 converted the Insurance Commissioner's status from an appointed position by the Governor into a position elected by the people of California. Proposition 103 also expanded the Department's important role in consumer protection by requiring that property and casualty insurance company rates be pre-approved by the Department before going into effect.
In the early 1990's, the state Legislature passed tough new anti-fraud insurance legislation that transformed the CDI into a law enforcement agency, in addition to its other functions. The legislation provided sworn peace officers to investigate and arrest those who commit fraud. The actions of fraud investigators in our Enforcement Branch have paved the way for direct cost savings to be passed on to consumers by way of lower premiums.
The CDI licenses and regulates insurance companies, agents, and brokers in California. Currently the Department licenses over 1,800 insurance companies and more than 335,000 individuals and business entities as insurance agents, brokers, adjusters, and bail agents. License fees, assessments, and Proposition 103 recoupment fees are the primary sources of funding for the CDI. Today we have a complement of 1,274 employees working to protect the consumers' insurance interests.
As a state mandated regulatory agency, the CDI has authority over how the insurance industry conducts business within California. The following eight points represent areas where regulatory authority is exercised on a daily basis by the Department:
Legal - Legal action is the ultimate enforcement instrument of the Department. Possible legal enforcement actions include: Cease and Desist Orders, Notices of Noncompliance, and Administrative Law Hearings. These actions may result in fines or penalties against our licensees.
Consumer Protection - The Department aids consumers by regulating how insurance companies market and administer their policies. Insurance business must be conducted in an honest, open, and fair manner.
Licensing - As mandated by the California Insurance Code (CIC), the Department holds licensing examinations for brokers and agents and investigates suspected violations of the CIC by licensees.
Enforcement - To protect the public from economic loss and distress by actively investigating and arresting those who commit insurance fraud and to reduce the overall incidence of insurance fraud through anti-fraud outreach to the public, private, and government sectors.
Certificates of Authority - Insurance companies that want to do business in California must apply and be reviewed by the Department to determine whether or not they should be given the authority to sell insurance in this state.
Conservation and Liquidation -The Department takes an active, leading role to conserve, rehabilitate, or liquidate troubled insurance companies under appointment of the Superior Court.
Rate Regulation - The Rate Regulation Branch, under the provisions of Proposition 103, reviews proposed personal auto and homeowners insurance rates to ensure that they are fair, reasonable, and adequate.
Financial Surveillance - By examining and reviewing key financial statements and conducting audits of insurance companies in California, the Department oversees the financial condition of the insurance industry and helps to ensure stability and to protect policyholders.
The Department's statewide toll-free consumer Hotline, 800-927-HELP (4357), provides callers with immediate access to current information on insurance issues. The Hotline is staffed by knowledgeable insurance professionals who can answer questions, give direction, and provide assistance to consumers who are experiencing insurance related problems or concerns. By calling the Hotline, a consumer can ask questions on insurance claims and underwriting practices as well as check the license status of his/her insurance company, agent, or broker.
After listening to and discussing a consumer's concerns over the phone, a Hotline officer may decide to send the consumer a Request for Assistance (RFA) form to be completed and returned to the Department. The RFA provides the necessary information to open a complaint investigation, which will be handled by officers in the Claims Services Bureau or the Rating and Underwriting Services Bureau, depending on the subject matter involved. Within 10 working days the consumer will receive an acknowledgment from the officer who will be handling the file.
Along with assisting consumers with specific insurance concerns, the Department publishes free brochures to help consumers become aware of their rights and to aid them in making informed insurance decisions. These publications can be requested by calling toll-free 800-927-HELP (4357). Also, as part of the Department's mission to protect consumers, the Education and Outreach Program provides speakers who can travel off-site to participate in public events such as town hall meetings, business and community fairs, and professional association events.
An excellent resource for the insurance consumer, this Department's Web site provides immediate access to a wealth of insurance information including regulations governing the insurance industry and a complete copy of the California Insurance Code. Consumers have the ability to fill out and send in a Request for Assistance (RFA) form online. Also, a direct link to the Department for e-mail correspondence is provided within the Web site. Our licensees have many opportunities to transact business with the Department though many on-line applications. We encourage you to explore our Web site.
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