(a) The commissioner, whenever he or she deems necessary or whenever he or she is requested by verified petition, signed by 25 persons interested as shareholders, policyholders, or creditors of any admitted insurer showing that the insurer is insolvent under this code, or upon information that any insurer has violated any provision of Article 7 (commencing with Section 800), shall examine the business and affairs of the insurer. The commissioner shall so examine every domestic insurer before issuing to it a certificate of authority other than a renewal.

(b) The commissioner may conduct an examination under this article of any company as often as the commissioner in his or her discretion deems appropriate but shall, at a minimum, conduct an examination of every insurer admitted in this state not less frequently than once every five years. In scheduling and determining the nature, scope, and frequency of the examinations, the commissioner shall consider the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants, market analysis results, including consumer complaint analysis, evaluation of ongoing regulatory activities, analysis of data derived from industry surveys or interrogatories, and other criteria as set forth in the Examiner‘s Handbook or in the Market Regulation Handbook adopted by the National Association of Insurance Commissioners that are in effect when the commissioner exercises discretion under this section.

Terms Used In California Insurance Code 730

  • Commissioner: means the Insurance Commissioner of this State. See California Education Code 25022.5
  • Company: means any person engaging in, or proposing or attempting to engage in, any transaction or kind of insurance or surety business and any person or group of persons who may otherwise be subject to the administrative, regulatory, or taxing authority of the commissioner. See California Insurance Code 729
  • Complaint: A written statement by the plaintiff stating the wrongs allegedly committed by the defendant.
  • Domestic: means organized under the laws of this State, whether or not admitted. See California Education Code 32031
  • Examiner: means any individual or firm authorized by the commissioner to conduct an examination under this article. See California Insurance Code 729
  • Foreign: means not organized under the laws of this State, whether or not admitted. See California Education Code 32032
  • Interrogatories: Written questions asked by one party of an opposing party, who must answer them in writing under oath; a discovery device in a lawsuit.
  • Oath: includes affirmation. See California Education Code 25020
  • Person: means any person, association, organization, business trust, partnership, limited liability company, or corporation, or any affiliate thereof. See California Insurance Code 729

(c) For purposes of completing an examination of any company under this article, the commissioner may examine or investigate any person, or the business of any person, insofar as the examination or investigation is, in the discretion of the commissioner, necessary or material to the examination of the company.

(d) In lieu of an examination under this article of any foreign or alien insurer admitted in this state, the commissioner may accept an examination report on the company as prepared by the insurance department of the company’s state of domicile or port-of-entry state until January 1, 1994. Thereafter, these reports may only be accepted if (1) the insurance department was at the time of the examination accredited under the National Association of Insurance Commissioner‘s Financial Regulation Standards and Accreditation Program, or (2) the examination is performed under the supervision of an accredited insurance department or with the participation of one or more examiners who are employed by an accredited state insurance department and who, after a review of the examination work papers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures required by their insurance department.

(e) The commissioner may postpone a market conduct examination otherwise required by this article for a period of up to three years if information derived from a market analysis indicates all of the following:

(1) The prior examination of the insurer resulted in no significant negative findings.

(2) The number of consumer complaints received by the insurer is in the lowest quartile of complaints, on a ratio basis, for insurers in that line of business.

(3) The market analysis identifies no other issues of significant concern.

(f) An admitted insurer shall maintain all records necessary to determine its financial condition for the current year plus the five previous years.

(Amended by Stats. 2017, Ch. 417, Sec. 8. (AB 1696) Effective January 1, 2018.)