SECTIONS 1759-1759.10 - California Statutes

INSURANCE CODE

SECTION 1759-1759.10

1759. For purposes of this chapter, "administrator" means any
person who collects any charge or premium from, or who adjusts or
settles claims on, residents of this state in connection with life or
health insurance coverage or annuities or coverage described in
Section 740 other than any of the following:
(a) An employer on behalf of its employees or the employees of one
or more subsidiary or affiliated corporations of that employer.
(b) A union on behalf of its members.
(c) An insurance company which is either licensed in this state or
acting as an insurer with respect to a policy lawfully issued and
delivered by it in and pursuant to the laws of a state in which the
insurer was authorized to do an insurance business or prepaid
hospital or health care service plan (including their sales
representatives licensed in this state when engaged in the
performance of their duties).
(d) A life or health agent or broker licensed in this state, whose
activities are limited exclusively to the sale of insurance.
(e) A creditor on behalf of its debtors with respect to insurance
covering a debt between the creditor and its debtors.
(f) A trust, its trustees, agents, and employees acting
thereunder, established in conformity with 29 U.S.C. Sec. 186.
(g) A trust exempt from taxation under Section 501(a) of the
Internal Revenue Code, its trustees, and employees acting thereunder,
or a custodian, its agents and employees acting pursuant to a
custodian account which meets the requirements of Section 401(f) of
the Internal Revenue Code.
(h) A bank, credit union or other financial institution which is
subject to supervision or examination by federal or state regulatory
authorities.
(i) A company which advances for and collects any premium or
charge from its credit card holders who have authorized it to do so,
provided the company does not adjust or settle claims.
(j) A person who adjusts or settles claims in the normal course of
his or her practice or employment as an attorney at law, and who
does not collect any charge or premium in connection with life or
health insurance coverage or annuities.
(k) An adjuster licensed by the Insurance Commissioner when
engaged in the performance of his or her duties.
(l) A nonprofit agricultural association.
(m) Any person or entity subject to regulation under Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code.

1759.1. No administrator shall act as such without a written
agreement between the administrator and the insurer, and such written
agreement shall be retained as part of the official records of both
the insurer and the administrator for the duration of the agreement
and five years thereafter. Such written agreement shall contain
provisions which include the requirements of Sections 1759.2 to
1759.8, inclusive, except insofar as those requirements do not apply
to the functions performed by the administrator.
Where a policy is issued to a trustee or trustees, a copy of the
trust agreement and any amendments thereto shall be furnished to the
insurer by the administrator and shall be retained as part of the
official records of both the insurer and the administrator for the
duration of the policy and five years thereafter.

1759.2. Whenever an insurer utilizes the services of an
administrator under the terms of a written contract as required in
Section 1759.1, the payment to the administrator of any premiums or
charges for insurance by or on behalf of the insured shall be deemed
to have been received by the insurer, and the payment of return
premiums or claims by the insurer to the administrator shall not be
deemed payment to the insured or claimant until such payments are
received by the insured or claimant. Nothing herein shall limit any
right of the insurer against the administrator resulting from its
failure to make payments to the insurer, insureds or claimants.

1759.3. (a) Every administrator shall maintain at its principal
administrative office for the duration of the written agreement
referred to in Section 1759.1 and five years thereafter adequate
books and records of all transactions between it, and insurers and
insured persons. The books and records shall be maintained in
accordance with prudent standards of insurance recordkeeping. The
insurer shall retain the right to continuing access to the books and
records of the administrator sufficient to permit the insurer to
fulfill all of its contractual obligations to insured persons,
subject to any restrictions in the written agreement between the
insurer and administrator on the proprietary rights of the parties in
the books and records.
(b) The commissioner shall have access to the books and records
for the purpose of examination, audit, and inspection. Any
information contained in the books and records, including, but not
limited to, the identity and addresses of policyholders and
certificateholders, shall be confidential, except the commissioner
may use the information in any proceedings instituted against the
administrator.
(c) The commissioner may, after notice and hearing, promulgate
reasonable rules and regulations specifying the manner and type of
records to be maintained by administrators.
(d) Every administrator shall keep and maintain the books and
records required by this section and the regulations promulgated
pursuant to this section. Failure to keep or maintain the books and
records as required shall be grounds for the suspension or revocation
of the certificate of registration of the administrator. The
proceeding shall be conducted in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code.

1759.4. An administrator may use only such advertising pertaining
to the business underwritten by an insurer as has been approved by
such insurer in advance of its use.

1759.5. The agreement shall make provision with respect to the
underwriting or other standards pertaining to the business
underwritten by such insurer.

1759.6. All insurance charges or premiums collected by an
administrator on behalf of or for an insurer or insurers, and return
premiums received from such insurer or insurers, shall be held by the
administrator in a fiduciary capacity. Such funds shall be
immediately remitted to the person or persons entitled thereto, or
shall be deposited promptly in a fiduciary bank account established
and maintained by the administrator. If charges or premiums so
deposited have been collected on behalf of or for more than one
insurer, the administrator shall keep records clearly recording the
deposits in and withdrawals from such account on behalf of or for
each insurer. The administrator shall keep copies of all such records
and, upon request of an insurer, shall furnish such insurer with
copies of such records pertaining to deposits and withdrawals on
behalf of or for such insurer. The administrator shall not pay any
claim on behalf of or for such insurer by withdrawals from such
fiduciary account. Withdrawals from such account shall be made, as
provided in the written agreement between the administrator and the
insurer, for (1) remittance to an insurer entitled thereto; (2)
deposit in an account maintained in the name of such insurer; (3)
transfer to and deposit in a claims paying account, with claims on
behalf of or for such insurer to be paid as provided in Section 1759.
7; (4) payment to a group policyholder for remittance to the insurer
entitled thereto; (5) payment to the administrator of its
commission, fees or charges; or (6) remittance of return premiums to
the person or persons entitled thereto.

1759.7. All claims paid by the administrator from funds collected
on behalf of the insurer shall be paid only on checks or drafts of,
or, with the consent of the insured, by an electronic funds transfer
from, and as authorized by the insurer.

1759.8. With respect to any policies where an administrator adjusts
or settles claims, the compensation to the administrator with regard
to such policies shall in no way be contingent on claim experience.

1759.9. Where the services of an administrator are utilized, the
administrator shall provide a written notice approved by the insurer,
to insured individuals, advising them of the identity of and
relationship among the administrator, the policyholder and the
insurer. Where an administrator collects funds, it must identify and
state separately in writing to the person paying to the administrator
any charge or premium for insurance coverage the amount of any such
charge or premium specified by the insurer for such insurance
coverage.

1759.10. No person shall act as, or hold himself out to be, an
administrator in this state, other than an adjuster licensed in this
state for the kinds of business for which he is acting as an
administrator, unless he holds a certificate of registration as an
administrator issued by the commissioner. Such certificate shall be
issued, renewed, and held in accordance with, and subject to, all the
provisions applicable to a life agent contained in Articles 6
(commencing with Section 1666), excluding Sections 1672 and 1673, 10
(commencing with Section 1708), excluding Section 1714, 11
(commencing with Section 1716), and 13 (commencing with Section
1737), excluding Sections 1741 and 1745, of, and subject to the fees
applicable to resident life agents as set forth in Article 14
(commencing with Section 1750) of, Chapter 5 of this division. Every
administrator shall also comply with Section 1724.5.