Chaptered Bill AB2557
BILL NUMBER: AB 2557 CHAPTERED
BILL TEXT
CHAPTER 279
FILED WITH SECRETARY OF STATE AUGUST 23, 2004
APPROVED BY GOVERNOR AUGUST 23, 2004
PASSED THE ASSEMBLY AUGUST 12, 2004
PASSED THE SENATE JULY 12, 2004
AMENDED IN SENATE JUNE 29, 2004
AMENDED IN SENATE JUNE 8, 2004
AMENDED IN ASSEMBLY APRIL 12, 2004
INTRODUCED BY Assembly Member Koretz
FEBRUARY 20, 2004
An act to amend Sections 1633 and 1749.1 of, and to add Section
1729.2 to, the Insurance Code, relating to insurance licensing.
LEGISLATIVE COUNSEL'S DIGEST
AB 2557, Koretz. Insurance: licensing.
Existing law makes it a misdemeanor to act, offer to act, or
assume to act in a capacity for which a license as an insurance
agent, broker, solicitor, or life agent is required without being
properly licensed to do so. This misdemeanor is punishable by
imprisonment of not more than 6 months in a county jail, a fine of
not more than $1,000, or both that imprisonment and fine.
This bill would make the transaction of insurance without a valid
license punishable as a misdemeanor by imprisonment in a county jail
for not more than one year, a fine of not more than $50,000, or both
that fine and imprisonment.
By increasing the time that could be served for the offense as a
misdemeanor, this bill would impose new local incarceration costs,
thereby imposing a state-mandated local program.
Existing law generally regulates the issuance of insurance
licenses and the conduct of licensees. Existing law allows the
Insurance Commissioner to deny an application for an insurance
license, or to suspend or revoke an existing license, for specified
reasons. Existing law requires licensees to notify the commissioner
of certain changes in the information provided on an application.
This bill would require an applicant or licensee to notify the
commissioner in writing, within a specified period, when certain
background information changes after the application has been filed
or the license has been issued, and would require certain licensees
to provide this notice to other specified persons. It would also
require 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, to notify the
commissioner of that change.
The bill would allow the commissioner to adopt regulations with
respect to these requirements.
Existing law requires that the Department of Insurance require all
new applicants for a license as a fire and casualty broker-agent,
personal lines broker-agent, or life agent to meet specified
prelicensing education standards. Existing law requires the
Insurance Commissioner to appoint a curriculum board consisting of
representatives of insurance agents, brokers, and life agents trade
associations and representatives of insurance companies and consumer
groups to develop the prelicensing and continuing education
curriculum, including a list of preapproved courses of study, and to
develop standards for providers and instructors of prelicensing and
continuing education courses, programs, and seminars. The curriculum
developed, the courses of study, and the standards for providers and
instructors approved by the board are required to be submitted to
the commissioner for final approval. In addition, existing law
provides that whenever the commissioner has reasonable cause to
believe, and determines after public hearing, that any approved
course, program of instruction, or seminar is being conducted so as
to fail to meet the commissioner's prelicensing or continuing
education curriculum, or any provider or instructor for any course,
program, or seminar has failed to comply with the commissioner's
standards, the commissioner may make and serve upon the provider or
instructor of that course, program, or seminar an order or orders
rescinding approval for that course, program, or seminar.
This bill would, in addition, authorize the commissioner to make
and serve an order rescinding approval for a provider who fails to
comply with the commissioner's standards. The bill would also
authorize the commissioner to impose fines and penalties, as
specified, for failure to comply with the commissioner's standards.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1633 of the Insurance Code is amended to read:
1633. Any person who transacts insurance without a valid license
so to act is guilty of a misdemeanor punishable by a fine not
exceeding fifty thousand dollars ($50,000) or by imprisonment in a
county jail for a period not exceeding one year, or by both that fine
and imprisonment.
SEC. 2. Section 1729.2 is added to the Insurance Code, to read:
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.
SEC. 3. Section 1749.1 of the Insurance Code is amended to read:
1749.1. (a) The commissioner shall appoint a curriculum board
consisting of representatives of insurance agents, brokers, and life
agents trade associations and representatives of insurance companies
and consumer groups to develop the prelicensing and continuing
education curriculum, including a list of preapproved courses of
study, including courses of study for professional designations which
would satisfy the requirements of this article. The curriculum
board shall develop or recommend courses of study covering all lines
of insurance to be sold under each license including, but not limited
to, any special products such as long-term care insurance, Medi-gap
policies, disability insurance products, and course study on ethics
and pertinent sections of this code. The curriculum developed and
the courses of study approved by the board shall be submitted to the
commissioner for final approval.
(b) The curriculum board shall also develop standards for
providers and instructors of prelicensing and continuing education
courses, programs, and seminars, which standards shall be approved by
the board and submitted to the commissioner for final approval.
(c) Whenever the commissioner has reasonable cause to believe, and
determines after public hearing, that any approved course, program
of instruction, or seminar is being conducted so as to fail to meet
the commissioner's prelicensing or continuing education curriculum,
or any provider or instructor for any course, program, or seminar has
failed to comply with the commissioner's standards, the commissioner
may make and serve upon the provider or instructor of that course,
program, or seminar an order or orders rescinding approval for that
provider, course, program, or seminar, or imposing fines and
penalties on that provider, or both. The amount of any fines and
penalties shall not exceed the amounts set forth in Section 1748, and
shall be based on the criteria for assessing penalties specified in
that section. No credit towards meeting the requirements of this
article shall be granted any applicant or licensee for completion of
a course, program, or seminar after the effective date of any order
rescinding approval for that course, program, or seminar. The
commissioner shall serve notice of hearing required by this section
upon the provider or instructor of the course, program, or seminar,
stating the time and place therefor, and the grounds upon which his
or her order is made. The hearing shall occur not less than 30 nor
more than 60 days after notice is served.
(d) The commissioner may impose monetary penalties for minor
instances of noncompliance with the standards established pursuant to
this article, such as late course roster submissions and late course
presentation schedules. The monetary penalties shall not exceed the
amounts of the fees established pursuant to Section 1751.1. The
commissioner shall adopt regulations to establish the monetary
penalties to be levied against providers for late filings and other
minor instances of noncompliance with this article and Article 6.5 of
Subchapter 1 of Chapter 5 of Title 10 of the California Code of
Regulations.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
BILL TEXT
CHAPTER 279
FILED WITH SECRETARY OF STATE AUGUST 23, 2004
APPROVED BY GOVERNOR AUGUST 23, 2004
PASSED THE ASSEMBLY AUGUST 12, 2004
PASSED THE SENATE JULY 12, 2004
AMENDED IN SENATE JUNE 29, 2004
AMENDED IN SENATE JUNE 8, 2004
AMENDED IN ASSEMBLY APRIL 12, 2004
INTRODUCED BY Assembly Member Koretz
FEBRUARY 20, 2004
An act to amend Sections 1633 and 1749.1 of, and to add Section
1729.2 to, the Insurance Code, relating to insurance licensing.
LEGISLATIVE COUNSEL'S DIGEST
AB 2557, Koretz. Insurance: licensing.
Existing law makes it a misdemeanor to act, offer to act, or
assume to act in a capacity for which a license as an insurance
agent, broker, solicitor, or life agent is required without being
properly licensed to do so. This misdemeanor is punishable by
imprisonment of not more than 6 months in a county jail, a fine of
not more than $1,000, or both that imprisonment and fine.
This bill would make the transaction of insurance without a valid
license punishable as a misdemeanor by imprisonment in a county jail
for not more than one year, a fine of not more than $50,000, or both
that fine and imprisonment.
By increasing the time that could be served for the offense as a
misdemeanor, this bill would impose new local incarceration costs,
thereby imposing a state-mandated local program.
Existing law generally regulates the issuance of insurance
licenses and the conduct of licensees. Existing law allows the
Insurance Commissioner to deny an application for an insurance
license, or to suspend or revoke an existing license, for specified
reasons. Existing law requires licensees to notify the commissioner
of certain changes in the information provided on an application.
This bill would require an applicant or licensee to notify the
commissioner in writing, within a specified period, when certain
background information changes after the application has been filed
or the license has been issued, and would require certain licensees
to provide this notice to other specified persons. It would also
require 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, to notify the
commissioner of that change.
The bill would allow the commissioner to adopt regulations with
respect to these requirements.
Existing law requires that the Department of Insurance require all
new applicants for a license as a fire and casualty broker-agent,
personal lines broker-agent, or life agent to meet specified
prelicensing education standards. Existing law requires the
Insurance Commissioner to appoint a curriculum board consisting of
representatives of insurance agents, brokers, and life agents trade
associations and representatives of insurance companies and consumer
groups to develop the prelicensing and continuing education
curriculum, including a list of preapproved courses of study, and to
develop standards for providers and instructors of prelicensing and
continuing education courses, programs, and seminars. The curriculum
developed, the courses of study, and the standards for providers and
instructors approved by the board are required to be submitted to
the commissioner for final approval. In addition, existing law
provides that whenever the commissioner has reasonable cause to
believe, and determines after public hearing, that any approved
course, program of instruction, or seminar is being conducted so as
to fail to meet the commissioner's prelicensing or continuing
education curriculum, or any provider or instructor for any course,
program, or seminar has failed to comply with the commissioner's
standards, the commissioner may make and serve upon the provider or
instructor of that course, program, or seminar an order or orders
rescinding approval for that course, program, or seminar.
This bill would, in addition, authorize the commissioner to make
and serve an order rescinding approval for a provider who fails to
comply with the commissioner's standards. The bill would also
authorize the commissioner to impose fines and penalties, as
specified, for failure to comply with the commissioner's standards.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1633 of the Insurance Code is amended to read:
1633. Any person who transacts insurance without a valid license
so to act is guilty of a misdemeanor punishable by a fine not
exceeding fifty thousand dollars ($50,000) or by imprisonment in a
county jail for a period not exceeding one year, or by both that fine
and imprisonment.
SEC. 2. Section 1729.2 is added to the Insurance Code, to read:
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.
SEC. 3. Section 1749.1 of the Insurance Code is amended to read:
1749.1. (a) The commissioner shall appoint a curriculum board
consisting of representatives of insurance agents, brokers, and life
agents trade associations and representatives of insurance companies
and consumer groups to develop the prelicensing and continuing
education curriculum, including a list of preapproved courses of
study, including courses of study for professional designations which
would satisfy the requirements of this article. The curriculum
board shall develop or recommend courses of study covering all lines
of insurance to be sold under each license including, but not limited
to, any special products such as long-term care insurance, Medi-gap
policies, disability insurance products, and course study on ethics
and pertinent sections of this code. The curriculum developed and
the courses of study approved by the board shall be submitted to the
commissioner for final approval.
(b) The curriculum board shall also develop standards for
providers and instructors of prelicensing and continuing education
courses, programs, and seminars, which standards shall be approved by
the board and submitted to the commissioner for final approval.
(c) Whenever the commissioner has reasonable cause to believe, and
determines after public hearing, that any approved course, program
of instruction, or seminar is being conducted so as to fail to meet
the commissioner's prelicensing or continuing education curriculum,
or any provider or instructor for any course, program, or seminar has
failed to comply with the commissioner's standards, the commissioner
may make and serve upon the provider or instructor of that course,
program, or seminar an order or orders rescinding approval for that
provider, course, program, or seminar, or imposing fines and
penalties on that provider, or both. The amount of any fines and
penalties shall not exceed the amounts set forth in Section 1748, and
shall be based on the criteria for assessing penalties specified in
that section. No credit towards meeting the requirements of this
article shall be granted any applicant or licensee for completion of
a course, program, or seminar after the effective date of any order
rescinding approval for that course, program, or seminar. The
commissioner shall serve notice of hearing required by this section
upon the provider or instructor of the course, program, or seminar,
stating the time and place therefor, and the grounds upon which his
or her order is made. The hearing shall occur not less than 30 nor
more than 60 days after notice is served.
(d) The commissioner may impose monetary penalties for minor
instances of noncompliance with the standards established pursuant to
this article, such as late course roster submissions and late course
presentation schedules. The monetary penalties shall not exceed the
amounts of the fees established pursuant to Section 1751.1. The
commissioner shall adopt regulations to establish the monetary
penalties to be levied against providers for late filings and other
minor instances of noncompliance with this article and Article 6.5 of
Subchapter 1 of Chapter 5 of Title 10 of the California Code of
Regulations.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
