California Insurance Law and Regulations
Who regulates what
California insurance is governed by the Insurance Code, regulations in Title 10 of the California Code of Regulations, and the California Department of Insurance. The Insurance Commissioner is elected to a four-year term (a favorite trap, since most states appoint theirs). California uses prior approval rate regulation: most property/casualty rates and forms must be filed and approved before use, and Proposition 103 created the mandatory good driver discount (20% for drivers meeting statutory criteria).
Licensing and conduct
A resident fire and casualty broker-agent license runs on a two-year term and requires 24 hours of continuing education per term, including at least 3 hours of ethics. Insurers must appoint the producers who write for them, and a producer holds premium in a fiduciary capacity, so commingling funds is prohibited. Prohibited practices include misrepresentation, false advertising, twisting, rebating (offering anything of value not stated in the policy), and unfair claims settlement practices.
Claims and policyholder protection
The Fair Claims Settlement Practices Regulations set a clock: acknowledge a claim within 15 days, accept or deny within 40 days after receiving proof of claim, and pay within 30 days after settlement. Personal auto cancellation requires 10 days' notice for nonpayment of premium and 20 days for other reasons; after a policy has been in force 60 days, cancellation is limited to specified statutory grounds, and nonrenewal requires advance written notice.
Safety nets include the California FAIR Plan (property), the California Earthquake Authority (earthquake), the California Insurance Guarantee Association (insolvent insurers, up to $500,000 per claim), and the Surplus Line Association for nonadmitted carriers.
Worked example
A claim arrives March 1: acknowledge by March 16. Proof of claim arrives March 5: decision due by April 14. If settled April 20, payment is due by May 20. Missing any step is an unfair claims practice.