Content blocks render in order below. Each block type keeps the same fixed styling everywhere in the platform — edit the text, the layout stays consistent.
A producer acts under the law of agency: the insurer is the principal, and the producer is the agent. Within the scope of the agent's authority, the acts of the agent are considered the acts of the insurer.
The agent is responsible for accurately completing applications, submitting them for underwriting, and delivering the policy. Because the agent owes a fiduciary responsibility to the insurer, it is illegal for the agent to commingle premium funds collected on the insurer's behalf with the agent's own personal or business funds.
Who is your pal? The principal! The insurer is the principal, and the agent always represents the insurer — never the insured — in the agency relationship.
A producer's authority to act on behalf of an insurer comes in 3 forms:
Transacting insurance includes any of the following:
It is a misdemeanor to transact insurance business without a valid license. The penalty is a fine of up to $50,000, imprisonment in county jail for up to 1 year, or both.
California issues license types corresponding to the classes of insurance an agent or broker is authorized to transact: property and casualty, life, accident and health or sickness, personal lines, and surplus lines. Every applicant for a producer license must first complete 12 hours of California Insurance Code and Ethics education.
An agent represents the insurer. A broker represents the client (the insured or prospective insured) in placing coverage, rather than representing any single insurer.
An insurance agent license under the Insurance Code covers all classes of insurance business other than life, disability, or health insurance. Common lines authorized under this license include:
A life agent license authorizes the sale of life insurance products, including endowments and annuities, and disability benefits such as accidental death and dismemberment and disability income. An accident and health (A&H) agent license authorizes coverage for sickness, bodily injury, accidental death, disability income, and 24-hour coverage.
A personal lines agent is limited to transacting personal lines property and casualty insurance for individuals and families. A limited lines automobile agent may transact only automobile insurance. A surplus line broker may place coverage with nonadmitted insurers when that coverage is unavailable from admitted insurers — no other agent or broker may advertise or transact business for a nonadmitted insurer.
A life and disability analyst is a person who, for a fee paid by a source other than an insurer, examines, appraises, reviews, or evaluates any life or disability insurance policy or annuity contract and renders advice, recommendations, counsel, or opinions.
To be eligible for a life and disability analyst license, an applicant must:
An applicant must also have been licensed as a life agent, or as an accident and health agent, for at least 5 years immediately preceding application.
An analyst must enter into a written agreement, signed by the client, before charging a fee. An analyst may not charge a fee for services that are customarily performed as part of soliciting or transacting insurance, or for which the analyst is otherwise compensated by an insurer. The written agreement must disclose that information about the policy is available at no charge, and if the analyst also holds an agent's license, must disclose any commission the analyst will receive.
A life analyst is not paid a commission by an insurer for the advice given. A life agent, by contrast, transacts insurance business — soliciting applications and executing contracts — and is compensated by commission from the insurer.
A certified insurance agent is certified by Covered California (the state's health benefit exchange) to assist individuals and small employers with enrollment through the Exchange or the Small Business Health Options Program (SHOP). To become certified, an applicant must be a natural person holding an accident and health license in good standing. Certification must be renewed every 5 years.
A life settlement is the sale of a life insurance policy, by the owner, to a third party for compensation that is less than the policy's death benefit but generally more than its cash surrender value. A viatical settlement is a similar transaction, historically limited to insureds who are terminally or chronically ill; a life settlement may involve a seller with a life expectancy of more than 1 year.
A life settlement contract is an agreement establishing the terms under which compensation is provided in exchange for the death benefit, ownership, or a beneficial interest in a life insurance policy or an interest in a trust that owns a policy. A life settlement contract may also include a premium finance loan made for the purpose of ultimately settling the policy, under specified conditions.
The following are not considered life settlement contracts:
A life agent licensed for 1 year or more may act as a life settlement broker without a separate license by providing the Department of Insurance with 10 days' notice, along with an $85 notification fee, renewable every 2 years. Viatical settlement brokers and providers already licensed are deemed to meet the licensing requirements for life settlement brokers.
A solicitor is a natural person who assists a property and casualty agent or broker in transacting insurance business other than life, disability, or health insurance. A solicitor may not simultaneously hold a license as an agent or broker.
A solicitor's duties may include prospecting for new business, making appointments, providing quotes, and taking applications, but the solicitor must always act on behalf of a licensed agent or broker. A solicitor may work for more than one producer, but a notice of appointment must be filed for each producer beyond the first. A solicitor's license is required to perform these functions.
There is no such license as a "life solicitor" or an "accident and health solicitor" — the solicitor license applies only to property and casualty business.
A third-party administrator (TPA) collects premiums or settles claims on behalf of an insurer or insured. An administrator must meet the same qualifications required of a life agent and must operate under a written agreement, and must hold a certificate of registration.
Payments made to an administrator are considered to have been received by the insurer. However, payments made by the insurer that pass through an administrator are not considered received by the insured until actually delivered.
The following are not considered administrators:
Continuing education (CE) ensures that licensees stay current on insurance law, products, and ethical standards. All producers must complete 24 hours of CE, including 3 hours of ethics, during each 2-year license term. This requirement applies to life, accident and health, property, casualty, and personal lines licensees.
CE may be completed at any time before renewal and must be approved by the Commissioner. A licensee holding 2 or more license types may satisfy the CE requirement by completing courses applicable to any one of those license types. CE hours completed in excess of the requirement carry over, but only the excess from the most recent year carries over, and it is capped at the amount needed to satisfy the next renewal's requirement.
CE courses may be taken in a classroom (contact) setting or as self-study, but must be approved by the Department of Insurance. A licensee who has held a license in good standing for 30 years and is 70 years of age or older is exempt from the CE requirement.
An agent must complete 8 hours of annuity training before the first sale of an annuity product, and 4 hours every 2 years thereafter. This training is part of, and does not increase, the agent's overall CE requirement.
LTC training is required for agents selling policies or riders that provide coverage for personal care services; it is not required for riders that do not include personal care services.
An agent must complete 8 hours of LTC training in each of the first 4 years after the original license is issued, and 8 hours before each subsequent license renewal.
Insurers must ensure that their agents are able to explain the differences between an accelerated death benefit and long-term care insurance, and that agents can accurately communicate:
Agents who sell California Partnership for Long-Term Care (CPLTC) policies must complete 1 LTC training course and 1 8-hour live classroom CPLTC-specific course before their initial sale, and an 8-hour live classroom CPLTC course every 2 years thereafter. Life agents who complete this training may solicit LTC riders; this training does not increase the agent's total CE hour requirement.