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Certificate of Authority Section III

Documents Required for Certificate of Authority Application

We have divided the documents you are required to submit with your Certificate of Authority application into four basic categories -- operational, financial, memberships, and alien requirements. While this subdivision can be used as a guide to understanding the main focus of each document, documents are typically used for multiple purposes. For example, your Profile (Item 3) will be used for financial as well as operational reviews. Therefore, it is important that when you submit your application for review, it is accompanied by a complete copy of the entire application.

Where noted, detailed guidelines for some of the documents are provided in Section IV: Guidelines & Sample Language.

Operational Documents

Application Form
The application will need to identify all lines of insurance the applicant is currently licensed to transact in other jurisdictions, as well as identifying all lines of insurance the applicant is requesting authority to transact in California, as identified by the applicant's plan of operation. An original executed application form should be submitted as Item 1 of your application. [CIC §700, 717]
Filing Fee
The application will need to include a filing fee. A check for the filing fee should be made payable to the California Department of Insurance. A copy of the applicant's check should be submitted as Item 2 of your application. (Please be sure to also include a separate check to cover your fingerprint fees, as described in Item 7.) [CIC, §705.1]
Profile
The application will need to include a profile of the applicant. The profile consists of two distinct parts -- a depiction of the applicant's organization and a detailed plan of operation. The organizational depiction should include charts showing the various management offices and departments of the applicant, along with the name and title of those responsible for those offices and departments. Additional charts should be provided to depict any operation that is delegated to an affiliate or third party, and any situation where resources are pooled among affiliates. In addition, applicants should include a map or narrative explaining where offices are geographically located and the approximate number of employees at each location.

It is also imperative that the profile identify any insurance company affiliated with the applicant. Please be sure to note any admitted affiliated companies and identify any applications those affiliates have pending before this department.

The plan of operation portion of the profile should present, in detail, the product lines currently sold and planned by the applicant, the applicant's marketing plan, a description of the applicant's current and expected competition (both regionally and nationally), and a discussion of how California fits into that plan. Producer-controlled insurers should explain their compliance with Article 4.8 of the Insurance Code (CIC §1216-1216.6). The plan should also include an exhibit that shows, by state and by line, the volume of business produced and losses incurred in each state.

The Profile should be submitted as Item 3 of your application. See detailed guidelines in Section IV: Guidelines & Sample Language. [CIC §709, 717, 718, 1216]
Seasoning Requirements
The application will need to show that the applicant meets statutory seasoning requirements. A statement identifying the applicant's seasoning should be submitted as Item 4 of your application. See detailed guidelines in Section IV: Guidelines & Sample Language. [CIC §716]
Articles of Incorporation
The application will need to include the applicant's current Articles of Incorporation, originally certified by the domiciliary state official having custody of the Articles. The Articles should be submitted as Item 5 of the application. [CIC §707, 708]
Bylaws
The application will need to include the applicant's current bylaws, originally certified by the applicant's corporate secretary. The bylaws should be submitted as Item 6 of the application. [CIC §717]
Individual Affidavits and Fingerprints
The application will need to include Individual Affidavits and Fingerprint(s) from all of its officers, directors, key managerial personnel, and individuals with a 10% or more beneficial ownership in the applicant and the applicant's ultimate controlling parent. The Individual Affidavits should be submitted as Item 7 of your application. Please be sure to use the California forms. See detailed guidelines in Section IV: Guidelines & Sample Language for fingerprint(s) and affidavits. [CIC §704.5, 717, 718, 1101, 1649, 10435; Penal Code §11105]
Organizational Affidavit
The application will need to include an Organizational Affidavit, completed by an executive officer. The Organizational Affidavit should be submitted as Item 8 of your application. See detailed guidelines in Section IV: Guidelines & Sample Language. [CIC §717, 718]
Government Ownership or Control
If the applicant is owned, operated or controlled, directly or indirectly, by any other state, province, district, territory or nation, or any governmental subdivision or agency thereof, the application will need to include a detailed statement setting forth the particulars of the applicant's ownership, including addressing all of the issues raised in CIC §699.5(a). This statement should be submitted as Item 9 of your application. [CIC §699.5]
Advisory, Management and Service Agreements
The application will need to identify any "insurer function" delegated to another entity. The delegation of any insurer function must be in writing and must include safeguard provisions. Applicants will need to complete a Delegation of Insurer Functions Checklist and provide copies of the written agreements. The definition of "insurer functions" and "third parties" are included in the Delegation of Insurer Functions Checklist. A completed checklist, along with written agreements for each delegated function, should be submitted as Item 10 of your application. See detailed guidelines in Section IV: Guidelines & Sample Language. [CIC §717, 769, 815, 816, 1735]
Custody Agreements
If any of the applicant's stocks, bonds or other securities are not in the applicant's actual physical possession or in a safe deposit box under the exclusive control of the applicant (except as shown in the Schedules of Special and Other Deposits in the applicant's Annual Statement), the application will need to include a written agreement with each entity holding and/or administering these securities. The written agreement should include appropriate safeguards for the handling of the securities. The applicant should include a statement setting forth whether or not any of the applicant's stocks, bonds or other securities are in the physical possession of another entity. The statement and copies of the custody agreements should be submitted as Item 11 of your application. See detailed guidelines in Section IV: Guidelines & Sample Language. [CIC §706.5, 717, 1100, 1104.9]
Questionnaire
The application will need to include a questionnaire which asks questions about the applicant's operation in other jurisdictions, as well as its proposed operation in California. The questionnaire should be submitted as Item 12 of your application. [CIC §717, 718]
Retaliatory Statement or Certificate
The application will need to include a statement from its domiciliary state insurance regulatory agency which sets forth all taxes, fees, deposit requirements, obligations, prohibitions or restrictions which are imposed upon a California domestic insurer seeking to transact business in that state. The retaliatory statement should be submitted as Item 13 of your application. [CIC §685]
Name Approval
The application will need to include either approval of the applicant's name by the California Insurance Commissioner, or a copy of the applicant's written request for name approval. The applicant will also need name approval from the California Secretary of State. Instructions for name approval qualification from the California Insurance Commissioner can be found in Section IV: Guidelines & Sample Language. Information about contacting the California Secretary of State is provided in Section V: Referrals to Other Agencies & Resources. A copy of the name approval application with the California Department of Insurance should be submitted as Item 14 of your application. [CIC §880, 881]
Qualification with California Secretary of State
The application will need to include a copy of the applicant's request to the California Secretary of State to conduct business in this state. The applicant will be required to qualify with the Secretary of State before it transacts any business in this state. A copy of your request for qualification should be submitted as Item 15 of your application. Please refer to Section V: Referrals to Other Agencies & Resources for additional information about contacting the California Secretary of State. [CIC §2105; CCR, Title 10, Ch. 5, §2277]

Helpful Hint: Qualification with the Secretary of State does not need to be completed prior to obtaining a Certificate of Authority from the Department of Insurance. To avoid the need to change your tax status with the Secretary of State and Franchise Tax Board, you may want to simply request qualification forms for the purpose of completing this application. You may then complete the qualification process with the Secretary of State after obtaining your Certificate of Authority.
Agent for Service of Process
The application will need to include an appointment of an agent for service of process. Do not appoint the Insurance Commissioner or a corporation. The agent for service of process must be located in California, preferably with an established place of business where the agent can be readily located and served with notices, legal process and papers. Date of agent's acceptance must be on or after the appointment/execution date. An original executed appointment form should be submitted as Item 16 of your application. [CIC §705.1, 1600]
Special Power of Attorney to Appoint and Certify Agents
The application will need to include the applicant's authorization granting a special power of attorney to appoint and certify agents. Two original executed appointment forms should be submitted as Item 17 of your application. See detailed guidelines in Section IV: Guidelines & Sample Language. [CIC §1704]
Workers' Compensation Deposit
If the applicant is requesting authority to transact workers' compensation insurance, a deposit will need to be included with the application. The deposit form should be submitted as Item 18 of your application. See detailed guidelines in Section IV: Guidelines & Sample Language. [CIC §11690 - 11718, 12920]
Holding Company Form "B" Registration Statement
If the applicant is a member of a holding company system, the application will need to include either a completed Form "B" registration statement, or a statement following the format set forth in CCR, Title 10, Chapter 5, §2683.23. The Registration Statement should be submitted as Item 19 of your application. [CIC §717, 1215, 1215.4]
Authorization for Disclosure of Financial Records
The application will need to include authorization for disclosure of the applicant's financial records. An original executed authorization form should be submitted as Item 20 of your application. [CIC §904]

Financial Documents

Minimum Paid-in Capital and Surplus Requirements
The application will need to show that the applicant meets statutory minimum paid-in capital and surplus requirements. Minimum paid-in capital and surplus requirements are determined by the classes of insurance the applicant is requesting authority to transact in California and the classes of insurance the applicant is authorized to transact in all other jurisdictions. The level of surplus required will be determined by the Commissioner after considering the applicant's product line, operating record and financial condition. Compliance with the statutorily prescribed minimum surplus requirement may not be sufficient for all applicants. Paid-in capital and surplus guidelines are in Section IV: Guidelines & Sample Language. A worksheet, which documents the applicant's paid-in capital and surplus, should be submitted as Item 21 of your application. [CIC §700.01 - 700.05, 10510, 10511; CCR, Title 10, Ch. 5, §2275]
Annual Statement with Attachments
The application will need to include three (3) copies of the applicant's most recent Annual Statement. The Annual Statement should be signed and verified. It should also include an original certification from the state insurance regulatory agency of the applicant's domiciliary state, along with a copy of the applicant's actuarial opinion certification. In addition to the most recent Annual Statement, the application also needs to include one copy of its Annual Statement for the two (2) preceding years. The applicant's Insurance Expense Exhibit, A-H Policy Experience Exhibits and/or Schedule P should be attached to the Annual Statements. If the applicant is part of a holding company system, you will also need to attach a copy of the applicant's most recent consolidated annual statement.

The Annual Statements, with attachments, should be submitted as Item 22 of your application. [CIC §706, 717]
Quarterly Statements
The application will need to include one (1) copy of each Quarterly Statement which follows the most recent Annual Statement. The Quarterly Statements should be submitted as Item 23 of your application. [CIC §706, 717]
Independent CPA-Audited Report
The application will need to include a CPA-audited report, performed by a Certified Public Accountant who is not an employee of the applicant. The CPA-audited report should be submitted as Item 24 of your application. [CIC §900.2]
Report of Examination
The application will need to include the applicant's most recent Report of Examination, covering a period of not more than three (3) years from the date the application is filed, unless certain exemption requirements are met. The report should contain an original certification from its domiciliary state insurance regulatory agency. The Report of Examination should be submitted as Item 25 of your application. See detailed guidelines in Section IV: Guidelines & Sample Language. [CIC §731]
Certificate of Organization, Capital and Assets
The application will need to include a Certificate of Organization, Capital and Assets. The Certificate of Organization, originally certified by the applicant's domiciliary state insurance regulatory agency, should be submitted as Item 26 of your application. [CIC §708, 709]
SEC Filings or Consolidated GAAP Financial Statement
If the applicant, its parent or its ultimate holding company, has made a filing or registration with the Securities and Exchange Commission in connection with a public offering within the last three years, or filed an 8K, 10K or 10Q within the last 12 months, the application will need to include a copy of the filing, including any supplements or amendments. If the applicant, its parent or its ultimate holding company, is not publicly traded, the application will also need to include a copy of the applicant's most recent Consolidated GAAP financial statement. The SEC Filings or Consolidated GAAP statement should be submitted as Item 27 of your application. [CIC §717]
NAIC Management Discussion Analysis
The application will need to include a NAIC Management Discussion Analysis, submitted pursuant to NAIC annual statement instructions, as Item 28 of your application. [CIC §717, 900.2]
Risk-Based Capital Report
The application will need to include a Risk-Based Capital Report, submitted in the level of detail required by the NAIC, as Item 29 of your application. Life and disability applicants should ensure compliance with §10550 through §10563 of the California Insurance Code. [CIC §717, 10550-10563]
Market Conduct Examination Report
The application will need to include a market conduct report, no more than three (3) years old, completed by the applicant's domiciliary state insurance regulatory agency. The examination report(s) should be submitted as Item 30 of your application. [CIC §717]
Statutory Financial Projections
The application will need to include statutory financial projections. As part of your statutory financial projections, please include:
- A summary of the applicant's operations and balance sheet projections for the next five (5) years;
- A five-year financial projection of the business (by product) that the applicant expects to transact in California;
- The assumptions and basis used to arrive at these projections, specifically addressing the asset and liabilities assumptions; and
- A written explanation that demonstrates how the elements of the applicant's plan of operation are substantiated by these projections.
  The financial projections should be submitted as Item 31 of your application. [CIC §717]
Debt-to-Equity Ratio Statement
For applicants who are members of a holding company system, the application will need to include a comprehensive debt-to-equity ratio statement, pursuant to the guidelines presented in Section IV: Guidelines & Sample Language. Debt-to-equity information should be submitted as Item 32 of your application. [CIC §717]
Reinsurance Arrangements
The application will need to include an outline of the applicant's reinsurance program or a treaty summary supported with full contract language. In addition, a treaty summary and a completed checklist will need to be provided for each reinsurance agreement submitted.
- Treaty Summary Form
- Reinsurance Checklist for Life Companies
- Reinsurance Checklist for Property and Casualty Companies
  
  Please feel free to duplicate the form and checklists as needed. The reinsurance summary, contract language, treaty summary(ies) and checklist(s) should be submitted as Item 33 of your application. See Section IV: Guidelines & Sample Language for detailed reinsurance guidelines. [CIC §620-623, 717(d), 803, 810, 922-922.8, 923, 1011(c), 6070-6072]

Statutory Membership

Workers' Compensation Insurance Rating Bureau (WCIRB)
If the applicant is requesting authority to transact workers' compensation insurance, the application will need to show the applicant's membership in the Workers' Compensation Insurance Rating Bureau (WCIRB). See Section V for additional information about contacting the WCIRB. A copy of the applicant's request to join the bureau should be submitted as Item 34 of your application. [CIC §11751.4]
California Life and Health Insurance Guarantee Association (CLHIGA)
If the applicant is requesting authority to transact life or disability insurance, the application will need to show the applicant's membership in the California Life and Health Insurance Guarantee Association (CLHIGA). Membership forms are enclosed. Three executed CLHIGA membership forms should be attached to the application as Item 35. [CIC §1067 - 1067.18]
California Insurance Guaranty Association (CIGA)
If the applicant is requesting authority to transact fire, marine, plate glass, liability, workers' compensation, common carrier liability, boiler and machinery, burglary, sprinkler, team and vehicle, automobile, aircraft or miscellaneous insurance, the application will need to show the applicant's membership in the California Insurance Guaranty Association (CIGA). However, if an applicant will transact only ocean marine insurance, it will not be required to join CIGA. Three executed CIGA membership forms should be submitted as Item 36 of your application. [CIC §1063 - 1063.15]
California Automobile Assigned Risk Plan (CAARP)
If the applicant is requesting authority to transact automobile insurance, the application will need to show the applicant's membership in the California Automobile Assigned Risk Plan (CAARP). Three executed CAARP membership forms should be submitted as Item 37 of your application. [CIC §11620; CCR, Title 10, Ch. 5, §2400]

Alien Insurer Requirements

Deed of Trust
If the applicant is an alien insurer, the application will need to include an original or certified copy of its deed of trust, executed pursuant to the requirements of CIC §1596. The deed of trust should be submitted as Item 38 of your application. [CIC §1596, 1596.5]
Statement of Trusteed Surplus
If the applicant is an alien insurer, the application will need to include a Statement of Trusteed Surplus in the United States. The Statement should include an original certificate of the Trustee of Assets. An original and two (2) copies of the statement, along with a filing fee of $21, should be submitted as Item 39 of your application. [CIC §1591, 1592]
Certificate of General State Deposits
If the applicant is an alien insurer, the application will need to include a Certificate of General State Deposits. The certificate must be an original certificate, issued by the applicant's domiciliary state insurance regulatory agency. The certificate should be submitted as Item 40 of your application. [CIC §1585]
Power of Attorney - U.S. Manager
If the applicant is an alien insurer, the application will need to include a certified copy of the U.S. Manager's Power of Attorney from its domiciliary state insurance regulatory agency. The certified copy of the Power of Attorney must be sent directly to the California Insurance Department from the domiciliary state insurance agency. The written request to your domiciliary state insurance agency requesting a certified copy of the Power of Attorney should be submitted as Item 41 of your application. [CIC §711 and 1596(d)(e)]

Other Requirements

Rate Filing - General
If the applicant is requesting authority to transact any line of insurance other than life, ocean marine, title, disability, workers' compensation, or mortgage, or it will not exclusively transact business as a reinsurer, the application will need to include the rates the applicant proposes to use in California. The SERFF Tracking Number should be submitted as Item 42 of your application. [CIC §1851, 1851.1, 1861.05, 1861.135, 1861.137; CCR, Title 10, Ch. 5, §2615.1 - 2632.12]
Rate Filing - Workers' Compensation
If the applicant is requesting authority to transact workers' compensation insurance, the application will need to include the rates the applicant proposes to use in California. The SERFF Tracking Number should be submitted as Item 43 of your application. [CIC §11734, 11735]
Actuarial Certification
If the applicant is requesting authority to transact life insurance, the application will need to include an actuarial certificate prepared by a qualified actuary. The certification should set forth that the applicant's outstanding life and/or disability policies (including coupons) are reserved, or will be reserved, in accordance with:
- sound actuarial practice; and
- CIC §10478 and/or CIC §997.
  
  The Actuarial Certification should be submitted as Item 44 of your application. [CIC §10489.15]
Variable Annuity, Modified Guaranteed Annuity or Variable Life
If the applicant is requesting authority to transact life insurance and it proposes to offer variable annuity, modified guaranteed annuity or variable life products, it will need separate qualification and approval before it can offer these products in California. Submit the applicant's written request for qualification to the department's Corporate Affairs Bureau at 1901 Harrison Street, 6th Floor, Oakland, CA 94612. Include in your request a description of the type of product(s) the applicant is seeking authority to transact and a self-addressed, stamped envelope.

Variable annuity, modified guaranteed annuity and variable life qualification applications will be considered concurrent with your application for a Certificate of Authority. However, since variable authority requires the department to seek input from federal agencies, you might not receive such authority at the same time your Certificate of Authority is issued. Please be aware that both approvals -- Certificate of Authority and variable authority -- must be obtained prior to offering variable annuity, modified guaranteed annuity or variable life products. [CIC §10506]

Variable Annuity and Variable Life Qualification Forms here.