New California legislation taking effect on Jan. 1, 2023, will impact insurer obligations in various areas. The legislation covers fingerprinting, licensing disclosures, education mandates, and insurance fraud reporting.
How might this legislation impact consumers in the state?
This legislation amends the California Insurance Code to require insurance agents and brokers who know or suspect an insurance application is fraudulent to submit information about the application to the Department of Insurance Fraud Division within 60 days. When an insurance producer discovers or suspects fraud after placing an application with a carrier, the producer must report it to the special investigation unit of the affected insurer. The producer must also provide any documents or evidence the insurance company requests.
This represents a change from previous requirements that only obligated carriers to report fraud. Producers who fail to comply with the new legislation could face regulatory exposure. However, they are also protected from civil liability, as long as they act in good faith.
Insurance commissioners must now submit fingerprint images and related information that could expose criminal convictions of applicants for licensing to the Department of Justice. This will make it more important for applicants for insurance licenses to fully disclose any criminal history they have.
Continuing education and email requirements
Beginning on March 1, 2023, current licensees and applicants for insurance licensing must complete an hour of coursework on insurance fraud. Additionally, all licensed insurance professionals in the state must include their license number in email communications.
This new legislation should make it more difficult for both insurance applicants and producers to participate in insurance fraud in the state.