11620-11627
INSURANCE CODE
SECTION 11620-11627
11620. (a) The commissioner, after a public hearing, shall approve
or issue a reasonable plan for the equitable apportionment, among
insurers admitted to transact liability insurance, of those
applicants for automobile bodily injury and property damage liability
insurance who are in good faith entitled to but are unable to
procure that insurance through ordinary methods. The commissioner
shall require the payment of five hundred ninety dollars ($590), in
advance, as a fee for the filing of amendments to the plan with the
commissioner. The commissioner may approve or issue reasonable
amendments to the plan if he or she first holds a public hearing to
determine whether the amendments are in keeping with the intent and
purpose of this section. All such insurers shall subscribe to the
plan and its amendments and participate in the plan.
(b) Judicial review of rate revision proceedings shall be in
accordance with Section 1858.6.
(c) Public hearings held pursuant to this section shall be
conducted in accordance with the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
11621.1. ln the event an insurer discontinues writing automobile
liability insurance in this state but retains its license to write
that business, it shall continue to pay plan assessments and receive
plan assignments until its quota or quotas established by its
writings prior to discontinuance of business has or have been filled.
However, if the automobile liability business of an insurer
discontinuing the writing of that business in this state has been
transferred to or reinsured by another insurer, the latter shall
receive and assume the plan assignments and plan assessments of the
insurer discontinuing business, as established by its writings prior
to the transfer or agreement of reinsurance, until its quota or
quotas has or have been filled, unless another insurer is allowed to
assume those obligations.
11621.2. (a) An insurer that is no longer licensed to write
automobile liability insurance in this state shall have its plan
business treated in the same manner as its voluntary business and
shall not receive new assignments.
(b) The runoff of existing plan business shall be conducted in an
orderly manner with policies nonrenewed upon the next anniversary
date.
(c) An insurer that elects to surrender its license or has its
license to do business in this state revoked shall comply with the
following requirements:
(1) If an insurer elects to leave this state by surrendering its
license to write automobile insurance, it shall submit to the plan's
advisory committee as a condition precedent to the surrender of its
license, a plan that disposes of the insurer's quota of plan
assignments established by its voluntary writings, and provides for
the handling of its outstanding assigned risk policies, including
payment of claims, by appropriate financial arrangements or
reinsurance agreements. The plan's advisory committee shall evaluate
the plan that is submitted and shall advise the commissioner as to
whether or not it recommends acceptance or rejection by the
commissioner of the plan.
(2) In the event an insurer's license to do business in this state
is revoked by the commissioner, the insurer shall submit to the plan'
s advisory committee a plan that disposes of the insurer's quota of
plan assignments established by its voluntary writings, and provides
for the handling of its outstanding assigned risk policies, including
payment of claims, by appropriate financial arrangements or
reinsurance agreements. The plan's advisory committee shall evaluate
the plan that is submitted and shall advise the commissioner as to
whether or not it recommends acceptance or rejection by the
commissioner of the plan.
(d) If all insurers in a group are under the same ownership and
management, or a group elects to be treated as a single insurer and
an insurer in the same group is no longer licensed, that insurer
shall comply with the provisions of this section.
11621.3. Insurer groups under the same ownership may elect to be
treated as one insurer for purposes of participating in the plan and
receiving its assignments and assessments pursuant to this article.
11621.4. (a) New plan assignments to a participating insurer may be
suspended or a participating insurer may be relieved of its
obligation to renew existing assigned risk policies at expiration
when a valid order of suspension is issued by the commissioner and
the suspension of assignments or policy renewals is approved by the
commissioner. Prior to the approval of a suspension of assignments or
policy renewals, the plan's advisory committee shall advise the
commissioner as to whether or not it recommends approval or denial of
the suspension.
(b) If an insurer granted relief pursuant to subdivision (a)
resumes writing business in this state, its quota shall reflect the
plan assignments it would have received and the assigned risk renewal
policies it would have issued during its period of suspension. The
required assignment adjustment shall be spread over a period of three
or more years, as determined by the commissioner. Prior to
determining this assignment adjustment, the plan's advisory committee
shall advise the commissioner as to whether or not it recommends
approval or denial of the adjustment.
(c) The adjustment of the insurer's quota shall be a percentage of
the insurer's under-assignments as determined by the commissioner.
Prior to determining this adjustment, the plans's advisory committee
shall advise the commissioner as to whether or not it recommends
approval or denial of the adjustment. After the approved period of
adjustment has expired, the insurer's normal quota will resume unless
the insurer shows good cause to and receives approval from the
commissioner for extension of the adjustment period. Prior to this
approval, the plan's advisory committee shall advise the commissioner
as to whether or not it recommends approval or denial of this
extension.
11621.5. (a) In the event proceedings have been initiated by the
commissioner to have an insurer declared insolvent, and a receiver or
liquidator has been appointed, the plan shall reimburse any insured
of that insurer for the unearned premium on any assigned risk policy
then in force, upon submission of satisfactory evidence from the
insured that the policy was in force at the time of the declaration
of insolvency and that the requisite premium had been paid.
(b) The amount expended by the plan to remit unearned premium to
insureds shall be deemed a cost of administration of the plan and
shall be apportioned as provided in the plan adopted and approved
pursuant to this article. The plan shall be subrogated in the
liquidation proceedings to the right of reimbursement of all insureds
to whom unearned premium has been remitted. In the event that the
insurer is subsequently found by the court not to be insolvent, the
proceedings are dismissed, and the receiver or liquidator has been
discharged, the insurer shall be assessed by the plan for the total
amount expended by the plan for return of unearned premiums.
11622. Such plan shall require the issuance of a policy affording
coverage in the amount of fifteen thousand dollars ($15,000) for
bodily injury to or death of each person as a result of any one
accident and, subject to said limit as to one person, the amount of
thirty thousand dollars ($30,000) for bodily injury to or death of
all persons as a result of any one accident, and the amount of five
thousand dollars ($5,000) for damage to property of others as a
result of any one accident, or in such minimum amounts as are
necessary to provide exemption from the security requirements of
Section 16021 of the Vehicle Code or for which proof of ability to
respond in damages or adequate protection against liability is
otherwise required by law, but shall not require the issuance of a
policy affording coverage in excess of said amounts.
11622.5. The plan shall provide for effective dates for coverage
consistent with all of the following:
(a) Except as provided in this section, in no event shall coverage
be effective prior to the date and time of execution of the
application forms. Postage meter or United States Postal Service
postmarks shall not be recognized by the plan as establishing
effective dates.
(b) (1) When the applicant requires that coverage be effective
immediately, the effective date and time shall be established using
an electronic effective date procedure established by the plan. The
plan shall establish a future effective date using the electronic
effective date procedure. The future effective date option shall be
available upon request by an applicant. An applicant may request a
future effective date of 45 days or less from the date of application
completion.
(2) The manager of the plan shall ensure access at no cost to the
user as part of the electronic effective date procedure. The manager
shall maintain sufficient capacity to service, in a timely manner,
applications received by means of the electronic effective date
procedure.
(3) The electronic effective date procedure shall be available
only to producers of record who are certified by the plan and shall
include a procedure to prevent fraudulent applications.
(4) A producer of record shall have a duty to comply with the
requirements of this section within 24 hours of the date and time the
application is completed and executed.
(c) Coverage for vehicles shall become effective at the date and
time the application is transmitted through the plan's electronic
effective date procedure if and only if all of the following
requirements are met:
(1) The producer of record and the applicant certify under penalty
of perjury on the application the date and time that the application
forms were completed and executed.
(2) The producer of record uses the electronic effective date
procedure adopted pursuant to subdivision (b).
(3) The application forms and required deposit are submitted to
the plan manager no later than two working days following the date
the application forms are completed and executed. The submission date
is established in accordance with the procedure established by the
plan.
(d) If the application is made without using the electronic
effective date procedure or if there is not compliance with the
provisions of subdivision (c), coverage shall be effective in
accordance with an alternative procedure established by the plan, but
not later than 12:01 a.m. on the date following receipt of the
application in the plan office unless a later date is requested.
(e) If the applicant desires coverage on a date later than that
which would otherwise be fixed pursuant to this section, the
applicant shall indicate that date and the plan manager shall fix the
effective date of coverage as of 12:01 a.m. on the desired date of
coverage. However, no date shall be later than 45 days after the date
of application.
(f) The effective date for coverage for an additional vehicle to
be added to an in-force policy or for other coverage to be added to
an in-force policy shall not be subject to the requirements of this
section, but shall be governed by the terms of the policy and other
applicable laws and regulations.
(g) In order to provide evidence of a requested effective date,
the plan shall establish a procedure for the maintenance of
appropriate records of all risks for which the producer of record has
designated the time and date of coverage.
(h) Where the plan's electronic effective date procedure is
disrupted due to failure of transmission or receiving equipment due
to fire, earthquake, explosion, civil unrest, or similar disaster or
emergency, the producer of record may bind coverage up to one day
prior to the time the application forms and required deposit are
mailed to the plan manager, as established by the United States
Postal Service postmark on the envelope in which the application was
enclosed.
(i) Notwithstanding any other provision of this section, where the
producer of record discovers a material error in an application, the
producer of record shall be authorized to rescind coverage bound for
a period up to 24 hours after the date and time established pursuant
to the plan's electronic effective date procedure.
(j) To ensure compliance with the electronic effective date
procedure, application forms shall contain the following statement in
12-point boldface type:
IMPORTANT NOTICE
THIS POLICY IS NOT EFFECTIVE UNTIL YOUR APPLICATION IS
ELECTRONICALLY TRANSMITTED TO THE PLAN BY YOUR AGENT OR BROKER. THE
FOLLOWING CONDITIONS MUST ALSO BE MET:
(1) BOTH YOU AND YOUR AGENT OR BROKER MUST SIGN AND DATE A
PROPERLY COMPLETED APPLICATION.
(2) YOUR AGENT OR BROKER MUST TRANSMIT YOUR APPLICATION TO THE
PLAN WITHIN TWO DAYS OF ITS COMPLETION.
YOU MAY REQUEST THAT YOUR AGENT OR BROKER TRANSMIT THE DOCUMENTS
IN YOUR PRESENCE TO ENSURE IMMEDIATE COVERAGE, PROVIDED THE ABOVE
REQUIREMENTS ARE MET.
IF THE ABOVE REQUIREMENTS ARE NOT MET, THE EFFECTIVE DATE OF YOUR
COVERAGE MAY BE DELAYED.
11623. (a) To assist the commissioner in carrying out the purposes
of this article, an advisory committee composed of 15 members is
created. The commissioner shall administer and operate the plan as
authorized by law. The commissioner shall consult with the advisory
committee on a regular basis on policy matters affecting the
operation of the plan.
Eight members representing subscribing insurers shall be elected
annually by subscribing insurers. The commissioner shall appoint the
noninsurer members. Four members shall represent the public. Two
members shall represent producers. The remaining member is the
commissioner or his or her designee.
All insurer representatives shall be salaried employees. At least
two insurer representatives shall be employed by insurers having
their principal headquarters located in California. At least two
insurer representatives shall represent companies who have average
annual automobile liability premiums in California below one hundred
million dollars ($100,000,000) in the prior three years. At least one
insurer representative shall represent an insurer with average
annual automobile liability premiums in California exceeding one
hundred million dollars ($100,000,000) in the prior three years. At
least one insurer representative shall represent an insurer with
average annual automobile liability premiums in California exceeding
seven hundred million dollars ($700,000,000) in the prior three
years.
Public members shall be paid two hundred fifty dollars ($250) per
meeting and shall be reimbursed all reasonable expenses incurred.
The commissioner shall remove members for nonattendance. Unless
satisfactory excuse is made in writing to the commissioner in a
timely manner, nonattendance shall mean the failure to appear at more
than two regularly scheduled meetings in a 12-month period. Should
the member who is removed represent a company or agency, another
representative from the company or agency may not be appointed for a
period of not less than two years.
The advisory committee with the approval of the commissioner shall
appoint a manager to carry out the purposes of this article, employ
sufficient personnel to provide services necessary to the operation
of the plan, and contract for the provision of statistical and
actuarial services.
The cost of the plan, including any personnel and contracting
costs, shall be fairly apportioned among the subscribing insurers to
whom assignments may be made. The costs associated shall be directly
attributable to the management of the plan and directly related to
its programs. In consultation with the advisory committee, the
commissioner shall develop, issue, and adopt regulations to carry out
the purposes of this article.
(b) Notwithstanding this act, which changes the status of the
governing committee to that of an advisory committee, the committee
shall have the right to retain counsel of its choice pursuant to a
selection process adopted by the committee and the right and
necessary standing to bring and defend actions in judicial and
administrative proceedings related to the plan in the name of the
plan, with all powers attendant thereto including the right to retain
consultants, counsel, and expert witnesses of its choice.
11623.5. (a) Groups of insurers not under common ownership or
management may form a limited assignment distribution arrangement.
Each arrangement shall have one servicing carrier that writes
assigned risk business on behalf of the members of the arrangement in
return for consideration from the other participating carriers for
not writing the business.
(b) No insurer may act as a servicing carrier except with the
continuing approval of the commissioner.
(c) Each servicing carrier shall have a surplus of at least ten
million dollars ($10,000,000).
(d) Upon the approval of the commissioner of a servicing carrier
under this section, the plan shall make all assignments that
otherwise would be made to a participant to the servicing carrier for
that participant.
(e) The commissioner shall impose a filing fee for the filing
necessary to obtain approval pursuant to this section, which fee
shall be limited to that sufficient to defray the costs of the
department in connection with considering the application.
11624. The plan shall contain:
(a) Standards for determining eligibility of applicants for
insurance, including a requirement of a certificate of eligibility as
provided in Section 11624.08, and in establishing those standards
the following may be taken into consideration in respect to the
applicant or any other person who may reasonably be expected to
operate the applicant's automobile with his or her permission:
(1) His or her criminal conviction record.
(2) His or her record of suspension or revocation of a license to
operate an automobile.
(3) His or her automobile accident records.
(4) His or her age and mental, physical and moral characteristics
which pertain to his or her ability to safely and lawfully operate an
automobile.
(5) The condition or use of the automobile.
(b) Procedures for making application for insurance, for
apportionment of eligible applicants among the subscribing insurers
and for appeal to the commissioner by persons who believe themselves
aggrieved by the operation of the plan.
(c) A provision that the organization administering the plan shall
notify the Department of Insurance regarding the name of each
applicant for insurance who is rejected by the assigned risk plan and
the statutory grounds for the rejection. The information contained
in that notification shall be for the confidential use of the
Department of Insurance.
(d) Rules and regulations governing the administration and
operation of the plan.
(e) Provisions showing the basis upon which premium charges shall
be made, and the manner of payment thereof. Premium charges for the
plan shall not be excessive, inadequate, nor unfairly discriminatory,
and shall be actuarially sound so as to result in no subsidy of the
plan. In no event shall the commissioner be required to approve a
plan rate that includes a provision for operating profits greater
than zero dollars. The commissioner shall not be required to allow a
contingency provision with respect to a plan rate if the commissioner
takes final action on an application for a rate change within 180
days from the date the application is submitted to the commissioner
by the plan's advisory committee. The plan shall include procedures
for notifying within a reasonable time the agent, broker, or
solicitor who obtained insurance under the plan for the insured of
any nonpayment of premium to the insurer when notice of the
nonpayment is sent to the insured pursuant to Section 662.
(f) Any other provisions as may be necessary to carry out the
purpose of this article.
11624.08. The plan shall require a certificate of eligibility to
accompany the application for coverage. The certificate shall
indicate whether or not the applicant meets the criteria for the
purchase of a good driver discount policy as set forth in Section
1861.025 and, if so, the name of the insurer and the insurer's
representative that denied the applicant automobile insurance
coverage.
The fact that an applicant has specified in the certificate of
eligibility a particular insurer as having denied automobile
insurance coverage shall not, by itself, be sufficient to sustain a
finding in a formal action brought by the commissioner under Section
1858.1 that the specified insurer in fact denied the applicant
automobile insurance coverage in violation of paragraph (1) of
subdivision (b) of Section 1861.02. The certificate shall be signed
by the applicant under penalty of perjury to verify its accuracy, and
shall only be required with applications for personal lines
automobile insurance through the plan. The agent or broker shall also
be required to sign the certificate of eligibility indicating that
he or she has reviewed the certificate for completeness.
11624.09. Upon a determination by the plan that a certificate of
eligibility is defective due to an omission or mistake which is
immaterial to determining the eligibility of the applicant for
coverage, the plan shall immediately provide written notice of the
defect or defects to the insured and to the agent or broker of
record. The notice shall inform the applicant that he or she has 10
days from the postmark date of the notice to correct the defect and
postmark the correction or missing information for return to the
plan.
In the event that the defect is not corrected within that 10-day
time period, the policy is void from inception. Providing a photocopy
of the application or certificate denoting the specific defect or
defects shall be adequate to comply with the requirement to specify
the defects in the certificate.
For purposes of this section, failure to provide a required
telephone number, time of day, producer number, producer signature,
date or information that is omitted but can be determined by
questions answered or information provided in other sections of the
application or documents submitted as part of the application, shall
be considered an omission or mistake immaterial to determining the
eligibility of the applicant for the plan coverage. A certificate of
eligibility that is submitted to the plan as to which the applicant
did not demonstrate a good faith effort in completing or where the
applicant has made a willful misrepresentation shall not be subject
to this section. In the event that the defect is material to
determining the eligibility of the applicant for coverage, the policy
is void from inception.
11624.1. (a) An insurer shall mail a policy within 30 days of the
receipt of an assignment.
(b) Upon the determination of an insurer to whom an assignment is
made that the application of an insured is defective, the insurer
shall immediately give written notice of the defect to the insured
and to the agent or broker of record that the insured has 15 days
from the mailing of the notice of defect to correct the defect.
11624.2. (a) An insurer shall acknowledge in writing within 15 days
the receipt of a request for the endorsement of an assigned risk
policy. The mailing of the endorsement within 15 days of receipt
shall constitute acknowledgement of receipt.
(b) Upon receipt of a completed request for an endorsement that
contains all information necessary for the issuance of an
endorsement, the insurer shall issue and mail the endorsement to the
insured within 30 days of the request for the endorsement.
(c) As used in this section, "endorsement" means an amendment of a
policy, such as a loss payee endorsement, the addition or deletion
of insureds, or the addition or deletion of coverage.
11624.3. Any return premium checks due to an insured or to a lender
subject to the provisions of subdivision (g) of Section 673 on
account of a cancellation or endorsement shall be mailed within 30
days of the effective date of the cancellation or endorsement.
11624.4. Every insurer to whom an assignment is made shall do all
of the following:
(a) Provide policyholders with information on how to report
claims.
(b) Provide brokers and agents with a toll-free telephone number
or accept their collect calls for the purpose of providing agents and
brokers with a means of communicating with the insurer in order to
rectify errors in applications or endorsements for assigned-risk
coverage.
(c) Reply in writing within 15 days to complaints disputing the
amount of premium charged for coverage under this article.
11624.5. No insurance agent, broker or solicitor shall make any
charge to the applicant, directly or indirectly, for furnishing any
person the necessary application forms, technical assistance and
services necessary to perfect an application through the plan other
than such commission as is paid by the insurer pursuant to the
provisions of such plan.
11624.6. Every insurer, agent, or broker assigned an application by
the plan may conclusively rely on the acceptance, rejection, or
waiver of coverages stated in the application signed by the
applicant. A policy shall only be issued for the coverages, limits,
and deductibles stated in the application assigned by the plan. This
section shall apply to all applications assigned by the plan which
are submitted to the plan by a person licensed pursuant to Chapter 5
(commencing with Section 1621) of Part 2 of Division 1.
11624.7. Within 60 days after the effective date of any policy
issued or renewed under this article, the insurer shall obtain from
the Department of Motor Vehicles, or from a subscribing loss
underwriting exchange carrier, a report on the applicant and any
other person who may reasonably be expected to operate the applicant'
s motor vehicle with the permission of the applicant. Any premium
adjustments that occur as a result of the inspection of the reports
shall be billed within the same 60-day period. This section does not
apply to amendments of a policy other than upon original issuance or
renewal.
11625. If an insurer admitted to transact liability insurance fails
to subscribe to the plan or to any amendments thereto, the
commissioner shall give 10 days' written notice to such insurer to so
subscribe. If such insurer fails to comply with such notice, then
the commissioner may, after hearing upon notice, suspend the
certificate of authority of such insurer to transact liability
insurance in this State until such insurer does so subscribe.
Proceedings under this section shall be conducted in accordance with
Chapter 5, Part 1, Division 3, Title 2 of the Government Code, and
the commissioner shall have all the powers granted therein.
11626. If the commissioner, after hearing upon not less than ten
(10) days' notice, finds that any insurer has failed to perform any
of the duties required of it by this article or by the plan, other
than those duties enumerated in Section 11625, he may issue an order
to such insurer specifying in what manner and to what extent he finds
the insurer to have so failed and requiring, within a reasonable
time, not less than 10 days, compliance with such requirements. If
within the period specified in the order the insurer fails to comply
with such order, such insurer shall, in addition to any other penalty
provided by law, forfeit to the State a penalty of five hundred
dollars ($500) for each such failure. The commissioner may bring an
action in his own name against the insurer to collect the said
penalty.
11626.1. (a) No insurer shall downgrade the rating, or otherwise
adversely affect the insurability, of a person insured under Section
11622.1 solely because of that person's participation in the assigned
risk plan or because that person contracts with a person insured
under Section 11622.1.
(b) An insurer violating subdivision (a) is subject to the
penalties set forth in Section 11626, and shall restore the insurance
rating, insurability, and coverage of any person harmed by the
violation.
11627. In this article, "insurer" includes reciprocal or
interinsurance exchanges.