California Insurance Code 985 – (a) On or after January 1, 1970, as used in this article and in …
(a) On or after January 1, 1970, as used in this article and in subdivision (i) of Section 1011, “insolvency” means either of the following:
(1) Any impairment of minimum “paid-in capital” or “capital paid in,” as defined in Section 36, required in the aggregate of an insurer by the provisions of this code for the class, or classes, of insurance that it transacts anywhere.
Terms Used In California Insurance Code 985
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Commissioner: means the Insurance Commissioner of this State. See California Insurance Code 20
- insolvency: means either of the following:
California Insurance Code 985
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Mortgage: includes a trust deed, "mortgagor" includes a trustor under such trust deed, "mortgagee" includes a beneficiary under such trust deed, or a trustee exercising powers or performing duties granted to or imposed upon him thereunder, and "lien" in respect to real or personal property includes a charge or incumbrance arising out of a trust deed. See California Insurance Code 29
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
(2) An inability of the insurer to meet its financial obligations when they are due.
(b) On or after January 1, 1970, an insurer cannot escape the condition of insolvency by being able to provide for all its liabilities and for reinsurance of all outstanding risks. An insurer must also be possessed of additional assets equivalent to the aggregate “paid-in capital” or “capital paid in” required by this code after making provision for all those liabilities and for that reinsurance.
(c) On or after October 1, 1967, as used in this code provision for reinsurance of all outstanding risks and “gross premiums without any deduction, received and receivable upon all unexpired risks” means the greater of: (1) the aggregate amount of actual unearned premiums, or (2) the amount reasonably estimated as being required to reinsure in a solvent admitted insurer the unexpired terms of the risks represented by all outstanding policies.
(d) On or after October 1, 1967, an insurer shall make provision for reinsurance of the outstanding risk on policies that provide premiums that are fully earned at inception and on policies that for any other reason do not provide for a return premium to the insured on cancellation prior to expiration.
(e) On or after October 1, 1967, the commissioner shall prescribe standards for reasonably estimating the amount required to reinsure that will provide adequate safeguards for the policyholders, creditors, and the public.
(f) On or after October 1, 1967, this section shall not be applicable to life, title, mortgage, or mortgage guaranty insurers.
(g) In the application of this section to disability insurance, as defined in Section 106, reserves for unearned premiums and amounts reasonably estimated as required to reinsure outstanding risks shall be determined in accordance with the provisions of Section 997.
(Amended by Stats. 2013, Ch. 321, Sec. 6. (AB 1391) Effective January 1, 2014.)