California Can Issue Fines for Insurance Code Violations

September 26, 2008

California Gov. Arnold Schwarzenegger has signed a bill establishing a citation program for minor violations of the Insurance Code.

Assembly Bill 2044 by Assemblyman Michael Duvall, R-Yorba Linda, “creates a new way for the Department to enhance consumer protections and encourage producers to follow the letter of the law,” said Commissioner Steve Poizner.

Under the law, when dealing with producers who have committed minor violations of the Insurance Code, the Department has three options: take formal legal action, issue a verbal or written warning, or take no action. This provision allows the Department to issue citations and small, pre-determined fines. That would permit discipline that is more rigorous than a warning, but less time and cost consuming than a full-dress legal proceeding, and provides greater consumer protection than what the current, less flexible statutes offer, the DOI said.

Minor violations include, but are not limited to, failure to display a producer license number in advertisements, failure to report a changed background status to the Department in a timely manner, and minor misstatements on a license application or renewal. The newly-established fines range from $200 to $500.

Source: DOI

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