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Citation 10 CCR 2175.4
Title Ineligible to engage in the business of insurance
Consequence Category Employment; Business license and other property rights
Consequence Details (a) There are no provisions in the Act or these regulations that exempt or except any Prohibited Person, who is currently engaging in, or transacting, the business of insurance from compliance with the Act and these regulations. The Act and these regulations expressly apply to all persons currently licensed who have been convicted of any criminal felony involving dishonesty, breach of trust or any violation of the Act.
(b) Any and all currently licensed individuals who are subject to the Act and who were granted a license by the Department following full and complete disclosure of their criminal history shall be deemed to have the Insurance Commissioner’s temporary consent to engage in or transact the business of insurance within the scope of their license authority only if the currently licensed individual submits an application for written consent within ninety (90) days from the effective date of these regulations. Any current licensee who is a Prohibited Person and who fails to submit an application for Written Consent within the ninety (90) day period will be barred from transacting the business of insurance as set forth in Title 18 USC section 1033.
(c) Any and all Prohibited Persons engaging in, or transacting, the business of insurance, without the express Written Consent of the Commissioner, are in violation of the Act and risk federal criminal sanctions.
10 CCR 2175.2:
(f) “Conviction” means a finding of guilty or a plea of guilty, nolo contendere or no contest in a criminal court of the United States of America or in any state, commonwealth or possession. Completion of deferred adjudication and conditional discharges are not convictions.
(m) “Prohibited Person” means any person who has been convicted of felony crimes of dishonesty, breach of trust in a state or federal jurisdiction or who has been convicted of any violation of 18 U.S.C. §1033 (the “Act”), who wishes to engage in or transact the business of insurance in this State, or who wishes to engage in or transact the business of insurance for insurers, and/or reinsurers and/or their agents and employees who are domiciled in this State. A “Prohibited Person” may be an officer, director or employee of an insurance agency or an insurance company, an agent, solicitor, broker, consultant, third-party administrator, managing general agent, or subcontractor representing an insurance agency or insurance company who engages in or transacts the business of insurance.
See also Cal Ins Code § 1723 (deny insurance business license (felonies involving dishonesty/crimes affecting insurance)).
Consequence Type Mandatory/Automatic
Supplemental Records Check 10 CCR 2176.4 requires notification of subsequent relevant convictions to Department.
Duration Category Permanent/Unspecified
Relief Details 10 CCR 2175.6:
The Prohibited Person must file an Application for Written Consent with the Department as set forth herein.
(a) Prohibited Persons must submit to the Department an Application for Written Consent (National Association of Insurance Commissioners’ (NAIC) Short Form Application for Written Consent to Engage in the Business of Insurance Pursuant to 18 U.S.C. § 1033 and 1034 (dated 1998), which is incorporated herein by this reference). Prohibited Persons are those defined in section 2175.2(m), herein.
(b) It is the responsibility of the applicant to read the Application in its entirety. Every question must be answered completely and truthfully. The NAIC Short Form Application is available at the Department’s website at http://www.insurance.ca.gov and at the Department of Insurance Licensing Background Bureau.
(c) Failure to submit a complete Application may result in delay or denial of the Commissioner’s Written Consent. The purpose of the Application is to provide the Prohibited Person with an opportunity to demonstrate that, notwithstanding the provisions of the Act, the Prohibited Person is fit to transact, or to engage in, the business of insurance without risk to consumers or insurers.
(d) The burden is upon the Prohibited Person to establish that the Commissioner’s Written Consent should be granted.
10 CCR 2175.7:
(a) The Insurance Commissioner shall have the sole discretion to grant or deny any Application for Written Consent to engage in or transact the business of insurance.
(b) Factors to be considered in granting or denying an Application for Written Consent will include, but are not limited to:
(1) The nature and severity of the crime.
(2) The length of time since the conviction.
(3) The injury and/or loss caused by the Prohibited Person. Whether the conviction is related to the business of insurance.
(4) Whether the Prohibited Person received a pardon from the sovereign that convicted him.
(5) Whether the Prohibited Person completed parole or probation.
(6) Whether a breach of trust, dishonesty or a violation of the Act was involved.
(7) The nature and strength of character reference letters.
(8) The person’s business and personal record before and after the conviction.
(9) Whether and to what extent the person has made material false statements in an application, renewal or in other documents filed with the Commissioner.
(10) Whether and to what extent the person has made material false statements in applications or other documents filed with other State or federal agencies.
(11) Whether the Prohibited Person’s conviction was expunged.
(12) Whether the conviction was received in a foreign country.
Triggering Offense Category Crimes involving fraud, dishonesty, misrepresentation or money-laundering; Other
Additional Triggering Offenses Violation of 18 USCS § 1033 (Crimes by or affecting persons engaged in the business of insurance whose activities affect interstate commerce)
Additional Offense Details
Last Reviewed Date/Time April 15, 2015, 12:39 p.m.
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