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CA Department of Insurance

Certificate of Authority Section IV - Item #10

Advisory, Management and Service Agreements

These guidelines set forth functions that the department considers to be basic elements of an insurance business. The department will require a written agreement for any function identified herein that is delegated to an entity other than the applicant. The written agreement must include specific safeguard provisions, as indicated below, to ensure that the applicant retains sufficient control of its business. The term "entity" includes an insurer's parent, its affiliate or any non-affiliate. Sample Intercompany Service Agreement.

The following are examples of different types of agreements that may delegate a function.

  • Cost sharing agreement
  • Employment agreement
  • Facility sharing agreement
  • Investment agreement
  • General agent agreement
  • Managing general agent agreement
  • Service agreement

The Delegation of Insurer Functions Checklist must be completed whether or not the applicant delegates a function to another entity.

When submitting a copy of an agreement for review, identify in the margin of the agreement where the specific topics set forth in this guideline have been addressed.


Insurer Functions

  1. Claims Payment or Adjusting
  2. Underwriting
  3. Investment Advice or Servicing
  4. Tax Allocation
  5. Producer's Commissions Computation or Payment
  6. Appointment and Cancellation of Agents
  7. Issuance of Policies and Endorsements
  8. Cancellation of Policies
  9. Collection and Handling of Premiums and Other Funds
  10. Reinsurance
  11. Facility Sharing
  12. Preparation of Financial Reports
  13. Advertising, Sales Promotion and Agency Development
  14. Reserving for Claims and Expenses

Back to Section IV: Guidelines & Sample Language

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