Laws and Regulations of the California Department of Insurance

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The California Department of Insurance (CDI) is a robust and expansive organization with plenty of regulatory and prosecutorial power. Their primary goal is to regulate insurance companies, agents, and brokers to keep the citizens of California safe from fraud and other deceptive practices.

Several crucial laws govern the CDI. These laws can generally be found in the California Insurance Code, available online in a searchable format.

How Does the CDI Govern Suspension Protocols?

Suspension protocols fall under the governance of Section 1748.5 of the California Insurance Code. This provision applies to licensees and non-licensees, as well as to board members, officers, and other insurance company or agency employees. 

It was enacted in 1991 to deal with those who have engaged in misconduct or have received claims of misconduct.

Cases brought under Section 1748.5 qualify as due process cases, but they usually favor the CDI since it gives the insurance commissioner grounds to revoke a license as long as they think the acts resulting from the complaint could result in future public harm.

Section 1748.5 also gives the insurance commissioner the power to restructure an insurance company’s management and to limit specific agency activities as long as they feel it is in the public’s best interests.

California Insurance Code Section 1729.2

California Insurance Code section 1729.2 states that individuals who have been convicted of various violations must report their conviction to the CDI within 30 days or face further disciplinary actions. Technically, the code states that an individual must notify the board if there are any changes to their background information.

The code defines “changes to background information” as any of the following:

  • Being convicted of a misdemeanor or felony
  • Having felony criminal charges filed against them in state or federal court
  • Using bankruptcy proceedings to discharge fiduciary funds or premiums
  • Administrative actions against a professional or occupational license
  • Admissions or judicial findings of fraud
  • General breach of fiduciary duties

Failure to report changes to any background information can result in any of the following formal disciplinary actions:

  • Fine
  • License denial
  • License revocation
  • License suspension
  • License restriction

Disciplinary hearings are serious matters that can upend your entire career. As such, if you receive notification that you are under investigation, contact a qualified insurance license defense attorney to advocate on your behalf and help with your defense.

California Penal Code Section 550

Section 550 of California’s penal code makes submitting a false insurance claim illegal. This code applies to consumers as much as it does to insurance agents, brokers, and companies. In addition, it applies to all types of insurance contracts and makes it illegal to present multiple payment claims for the same healthcare benefit.

Conviction under this statute can result in up to five years in state prison, a fine, or both. The fine will be up to $50,000 or double the total dollar amount of fraud that the individual perpetrated, whichever is greater.

Contact S J Harris Law Today

If you have received notification from the CDI that you are under investigation, S J Harris Law can help. Contact us today to discuss your case and learn more about the legal process. 

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When dealing with these complex issues, you need legal representation that has a long track record of success in these types of cases. Scott Harris and the rest of our team at S J Harris Law will be ready to help you pursue any option available that allows you to keep your license and continue working, no matter what industry you are in.


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