AB2557 Questions & Answers

Background Change Frequent Questions

What background changes must be reported?

• 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;
• 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, or managing general agent;
• Any admission, or judicial finding or determination of fraud, misappropriation, or conversion of functions, misrepresentation, or breach of fiduciary duty.

When must the background change be reported?

Within thirty days of a change in background information after an application has been filed or a license has been issued.

Who must comply?

1.  Any and all resident and non resident producer licensees and applicants who intend to transact in the business of insurance. This includes officers, directors, partners, members, or controlling persons under any resident or non resident business entity license or an application thereof.
2. Unlicensed officers, directors, partners, members or controlling persons, or any other natural person named under the business entity or an application thereof.

What types of licenses does the requirement apply to?

All insurance producer licenses. It 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 1 (commencing with Section 10110)
• of Part 2 of Division 2, Chapter 4 (commencing with Section 12280)
• of Part 5 of Division 2, Article 8 (commencing with Section 12418)
• of Chapter 1 of Part 6 of Division 2,
• and Chapter 1 (commencing with Section 14000) and Chapter 2 (commencing with Section 15000) of Division 5.

What is the business entity's responsibility?

It is the responsibility of the Business entity to report to the commissioner when any unlicensed officer, director, member, partner or controlling person listed on the business entity license or application of the business entity has a change in background information.

Which applicants and licensees are required to file the Change in Background Information? 

All licensees, applicants, and unlicensed officers, directors, and controlling persons must file the change in background information with the Commissioner. This pertains to individual licensees, business entity licensees, endorsees, or any unlicensed officer, director, partner or controlling person as defined in CIC 1668.5(b) of an organization license.

Whose responsibility is it to report the changes when it involves an endorsee under a Business Entity License or Application?  

The licensed endorsee has the duty to report the background change to the Commissioner. However, if the licensee is listed as an endorsee on any business entity license, the licensee shall also provide this notice to any officer, director, partner, listed on that business entity license.

How do I comply?

1. Complete the Background Information Disclosure Form (LIC FORM #2557B) (AB 2557B) using the online service
2. Attach certified copies of all court documents, setting forth the disposition of the matter, together with any other relevant documents or information that you would like to have considered. All such documents should be attached to the online submission but may also be mailed to the address listed under  "Where do I mail the background change form?"  Any documents delivered by mail must be submitted within 30 days of the disclosure submission.

Where do I mail the background change form?

Please mail it to:

California Department of Insurance
Attn: Producer Licensing Background Section
300 Capitol Mall, Suite 1600
Sacramento, CA 95814

You can also send it by fax to (916) 323-1512

Who can I contact if I have questions?

Please contact the Producer Licensing Background Section at (916) 492-3650 or by fax at (916) 323-1512.

Does the background change have to be reported in writing?

Yes. It must be filed in writing and signed by the licensee, unlicensed officer, or applicant who is reporting the change.

Must I disclose any civil judgments or judicial findings?

No. Only those civil judgments when an admission or judicial finding or determination of fraud, misrepresentation, or conversion of funds, misappropriation, or breach of fiduciary duty?

Must I disclose any type of bankruptcy filing?

No. Only bankruptcy cases where the licensee or applicant discharges or attempts to discharge any insurance premiums or fiduciary funds owed to any company, premium finance company, or managing general agent?

Must I disclose if I am only arrested for a crime?

No. You do not have to report only an arrest for a crime.

Do I have to report when criminal charges are filed against me?

Yes, when the filing of felony criminal charges occurs.  You must report any felony charges filed against you by a County or State District Attorney or United States Attorney within 30 days of the felony charges being filed. The criminal complaint or indictment issued will identify the charges and crimes you are accused of committing. (You do not have to report misdemeanor charges being filed against you, but you must report any misdemeanor once it results in a conviction).

Will I be contacted by the Department of Insurance's Producer Licensing Background Section?

You will be notified by letter if we have an issue or concern or if action is going to be taken, you will  be advised.

What will happen after the Background Change form is submitted?

It will be evaluated by the Producer Licensing Background Section to determine whether more information or documents are needed, and if any action is warranted against the license or licensing rights as a result of the matter.

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Helpful Definitions

• Licensing Glossary

What is the definition of "Applicants" and "Licensees"?

"Applicants" includes individual and business entity applicants, and officers, directors, partners, members and controlling persons as defined in subdivision (b) of California Insurance Code Section 1668.5 of a business entity.  

"Licensees" includes individual and business entity licensees, and officers, directors, partners, members and controlling persons as defined in subdivision (b) of California Insurance Code Section 1668.5 of an organization.  

What defines a "felony" offense?

Any crime for which the maximum authorized punishment exceeds one year. Felony includes any crime in any other state, commonwealth, territory or possession that is identified as a felony in that state, or if not identified as a felony, any offense for which the maximum authorized punishment is one year or more. In California, it includes any felony crime which has been set aside pursuant to California Penal Code Section 1203.4.  

What defines a "misdemeanor" offense?

Any offense punishable by imprisonment in the county jail not exceeding 1 year in the county jail, or by fine, or by both?

What defines a "conviction"?

"Conviction" includes but is not limited to having been found guilty by verdict of a judge or jury, having entered a plea of nolo contendere, having had any charge expunged, dismissed or plea withdrawn pursuant to California Penal Code Section 1203.4, or having been given probation, a suspended sentence, or a fine. You should disclose any crimes resulting in convictions relating to reckless driving, driving under the influence, and driving with a suspended license, whether or not you spent any time in jail, and whether or not you believe the conviction has been removed from your record.  

What is a "crime?"

Crime includes a misdemeanor, felony, or military offense. It includes driving under the influence of alcohol or drugs.