SECTIONS 1077-1077.95 - California Statutes

INSURANCE CODE

SECTION 1077-1077.95

1077. As used in this article:
(a) "Insurer" means and includes every person engaged as
indemnitor, surety, or contractor in the business of entering into
contracts of life or disability insurance or of annuities.
(b) "Exceeded its powers" means any of the following conditions:
(1) The insurer has refused to permit examination of its books,
papers, accounts, records, or affairs by the commissioner, his or her
deputies, employees, or duly commissioned examiners.
(2) A domestic insurer has unlawfully removed from this state
books, papers, accounts, or records necessary for an examination of
the insurer.
(3) The insurer has failed to promptly comply with the applicable
financial reporting statutes or rules and departmental requests
relating thereto.
(4) The insurer has neglected or refused to observe an order of
the commissioner to make good, within the time prescribed by law, any
prohibited deficiency in its capital, capital stock, or surplus.
(5) The insurer is continuing to transact insurance or write
business after its license has been revoked or suspended by the
commissioner.
(6) The insurer, by contract or otherwise, has unlawfully, or has
in violation of an order of the commissioner, or has without first
having obtained written approval of the commissioner, if approval is
required by law, done any of the following:
(A) Totally reinsured its entire outstanding business.
(B) Merged or consolidated substantially its entire property or
business with another insurer.
(7) The insurer engaged in any transaction in which it is not
authorized to engage under the laws of this state.
(8) The insurer refused to comply with a lawful order of the
commissioner.
(c) "Consent" means agreement to administrative supervision by the
insurer.

1077.1. The provisions of the article shall apply to all of the
following:
(a) All domestic life or disability insurers, except the State
Compensation Insurance Fund.
(b) Any other life or disability insurer doing business in this
state whose state of domicile has asked the commissioner to apply the
provisions of this article as regards that insurer.
(c) Notwithstanding subdivision (a), the State Compensation
Insurance Fund may give its consent to administrative supervision
pursuant to paragraph (5) of subdivision (a) of Section 1077.2.

1077.2. (a) An insurer may be subject to administrative supervision
by the commissioner if, upon examination or at any other time it
appears in the commissioner's discretion that any of the following
applies:
(1) The insurer's condition renders the continuance of its
business hazardous to the public or to its insureds.
(2) The insurer appears to have exceeded its powers granted under
its certificate of authority and applicable law.
(3) The insurer has failed to comply with the applicable
provisions of the Insurance Code.
(4) The business of the insurer is being conducted fraudulently.
(5) The insurer gives its consent.
(b) If the commissioner determines that the conditions set forth
in subdivision (a) exist, the commissioner shall do all of the
following:
(1) Notify the insurer of his or her determination.
(2) Furnish to the insurer a written list of the requirements to
abate this determination.
(3) Notify the insurer that it is under the supervision of the
commissioner and that the commissioner is applying and effectuating
the provisions of the article. The action by the commissioner shall
be subject to review pursuant to Section 12940.
(c) If placed under administrative supervision, the insurer shall
have 60 days, or another period of time as designated by the
commissioner, to comply with the requirements of the commissioner
subject to the provisions of this article.
(d) If it is determined after notice and hearing that the
conditions giving rise to the supervision still exist at the end of
the supervision period specified above, the commissioner may extend
the period.
(e) If it is determined that none of the conditions giving rise to
the supervision exist, the commissioner shall release the insurer
from supervision.

1077.3. (a) Notwithstanding any other provision of law, and except
as set forth in this section, proceedings, hearings, notices,
correspondence, reports, records, and other information in the
possession of the commissioner or the department relating to the
supervision of any insurer are confidential except as provided by
this section.
(b) The personnel of the department shall have access to these
proceedings, hearings, notices, correspondence, reports, records, or
information as permitted by the commissioner.
(c) The commissioner may open the proceedings or hearings or
disclose the notices, correspondence, reports, records, or
information to a department, agency, or instrumentality of this or
another state of the United States if the commissioner determines
that the disclosure is necessary or proper for the enforcement of the
laws of this or another state of the United States.
(d) The commissioner may open the proceedings or hearings or make
public the notices, correspondence, reports, records, or other
information if the commissioner deems that it is in the best interest
of the public or in the best interest of the insurer, its insureds,
creditors, or the general public.
(e) This section does not apply to hearings, notices,
correspondence, reports, records, or other information obtained upon
the appointment of a receiver for the insurer by a court of competent
jurisdiction.

1077.4. During the period of supervision, the commissioner or his
or her designated appointee shall serve as the administrative
supervisor. The commissioner may provide that the insurer may not do
any of the following things during the period of supervision, without
the prior approval of the commissioner or his or her appointed
supervisor:
(a) Dispose of, convey, or encumber any of its assets or its
business in force.
(b) Withdraw any of its bank accounts.
(c) Lend any of its funds.
(d) Invest any of its funds.
(e) Transfer any of its property.
(f) Incur any debt, obligation, or liability.
(g) Merge or consolidate with another company.
(h) Approve new premiums or renew any policies.
(i) Enter into any new reinsurance contract or treaty.
(j) Terminate, surrender, forfeit, convert, or lapse any insurance
policy, certificate, or contract, except for nonpayment of premiums
due.
(k) Release, pay, or refund premium deposits, accrued cash, or
loan values, unearned premiums, or other reserves on any insurance
policy, certificate, or contract.
(l) Make any material change in management.
(m) Increase salaries and benefits of officers or directors or the
preferential payment of bonuses, dividends, or other payments deemed
preferential.

1077.5. During the period of supervision the insurer may contest an
action taken or proposed to be taken by the supervisor specifying
the manner wherein the action being complained of would not result in
improving the condition of the insurer by requesting reconsideration
by the commissioner. Denial of the insurer's request upon
reconsideration entitles the insurer to seek judicial review under
Section 12940.

1077.6. Nothing contained in this article shall preclude the
commissioner from initiating judicial proceedings to place an insurer
in conservation, rehabilitation, or liquidation proceedings or other
delinquency proceedings, however designated under the laws of this
state, regardless of whether the commissioner has previously
initiated administrative supervision proceedings under this article
against the insurer.

1077.7. The commissioner may adopt reasonable rules necessary for
the implementation of this article.

1077.8. Notwithstanding any other provision of law, the
commissioner may meet with a supervisor appointed under this article
and with the attorney or other representative of the supervisor,
without the presence of any other person, at the time of any
proceedings or during the pendency of any proceeding held under
authority of this article to carry out the commissioner's duties
under this article or for the supervisor to carry out his or her
duties under this article.

1077.9. There shall be no liability on the part of, and no cause of
action of any nature shall arise against, the commissioner or the
department or its employees or agents for any action taken by them in
the performance of their powers and duties under this article.

1077.95. The authority granted pursuant to this article is in
addition to, and not in lieu of, any other provision of this code.