The California Department of Insurance recently sent a bulletin to every insurance agent and broker in the country who is licensed on a resident or non-resident basis, explaining a new requirement—which takes effect 1/1/23—that emails must include producer license numbers.

The bulletin has inspired a flood of questions to sister organization IIABCal regarding the scope of this new requirement.

Below is a short explanation of the new requirement, drafted by IIABCal General Counsel Steve Young, as well as the most frequently asked questions so far.

The CDI Bulletin has also unfortunately created significant confusion over when licenses are required.  The examples CDI cited in its bulletin imply that only licensees may send those types of messages, but CDI regulations expressly permit unlicensed persons to communicate with, and obtain information from, applicants and policyholders.

VIEW BULLETIN

BRIEF EXPLANATION

by IIABCal General Counsel Steve Young

As of the new year, an insurance producer or organization licensed to transact insurance in California will be required to include their California license number in all emails that involve any activity for which licensure is required. The license number must be in a type size that is no smaller than the largest of any telephone number, street address, or e-mail address of the person sending the email.

The license number of an individual must appear adjacent to, or on the line below, the individual’s name or title. The license number of a company or organization must appear adjacent to or on the line below the organization’s name.  Either the person’s individual license number, or the agency’s organization license number, may be used, but both are not required.

Under current law, license numbers must be posted, or otherwise displayed, in a variety of ways.

The license itself must by posted in your office (§1725).

The license number—and also the word, “insurance”—must be printed on business cards, written price quotations, and print advertisements distributed exclusively within the state (§1725.5).

A licensee acting as a broker or agent should use the license number under which they are transacting insurance; if they are acting as a transactor under an organizational license, then the organizational license number is sufficient, but if they are acting under an individual license, then that number should be used.

The license number must appear in the largest type size used to display the phone number, fax number, or business address.

The license number also must appear on your website if you do any advertising via internet (§1726).

View updated California Insurance Code Sections below (under FAQs)

FREQUENTLY ASKED QUESTIONS:

Does this new law apply to non-resident licensees of the California Department of Insurance (CDI)?  

Yes.

Can an agency use its National Producer Number (NPN), instead of its CDI license number, to satisfy this requirement?  

No.

Must the license number be included in all emails?  

Most, but not all.  The license number must be included on emails concerning any activity that falls within the definition of, “transaction of insurance.”  Applicable emails would include solicitations, discussions or recommendations regarding coverage or any other aspect of an insurance contract, collecting premium or issuing binders (or other evidences of insurance), or matters arising out of the insurance contract after it has gone into effect.

Does this new law expand or change who is required to be licensed?  

No.  Individuals performing “clerical activities” are not required to be licensed, provided they are working under the supervision of a licensee.  An open question is whether “clerical” emails should include the license number of the supervising licensee.  The law does not expressly address that situation, and we have not yet ascertained the CDI’s position on that question.

If an agency holds an organization license from the CDI, and individual producers also hold CDI licenses, which license number needs to appear in the email signature?  

Either.

Updated California Insurance Code Sections

according to IIABCal General Counsel Steve Young

CALIFORNIA INSURANCE CODE - SECTION 1725.

Every license to act as a fire and casualty broker-agent shall be prominently displayed by the holder thereof in his or her office in a manner whereby anyone may readily inspect it and ascertain both its currency and the capacity in which its holder is licensed to act.

CALIFORNIA INSURANCE CODE - SECTION 1725.5.

1.  A person licensed under Section 1625, 1625.5, 1625.55, 1626, 1758.1, 1765, 1800, 14020, or 15006, or Chapter 8 (commencing with Section 1831), shall affix, type, or print on business cards, written price quotations for insurance products, and print advertisements distributed exclusively in this state for insurance products, its license number in a type size that is at least as large as any indicated telephone number, address, or fax number or in 12-point type, or in 8-point type for business cards, whichever is larger. If a licensee includes the names of multiple licensed organizations on a business card, written price quotation, or print advertisement distributed exclusively in this state, affixing, typing, or printing the license number of any one of the organizations complies with the requirements of this section.


2.  A person licensed under Section 1625, 1625.5, 1625.55, 1626, 1758.1, 1765, 14020, or 15006, or Chapter 8 (commencing with Section 1831), shall affix, type, or print on business cards, written price quotations for insurance products, and print advertisements distributed in this state for insurance products, the word “Insurance” in a type size that is at least as large as the smallest telephone number or in 12-point type, or in 8-point type for business cards, whichever is larger.


3.  A person licensed under Section 1625, 1625.5, 1625.55, 1626, 1758.1, 1765, 14020, or 15006, or Chapter 8 (commencing with Section 1831), shall include the person’s license number in the emails the person sends that involve an activity for which a license is required. A person’s license number shall be in a type size that is no smaller than the largest of any telephone number, street address, or email address of the person included in the email. The license number of an individual licensee shall appear adjacent to or on the line below the individual’s name or title. The license number of an organizational licensee shall appear adjacent to or on the line below the organization’s name.


4.  A natural person who is a solicitor, as defined in Section 1624, working exclusively as an employee of a motor club agent, or working exclusively for a property broker-agent or casualty broker-agent on behalf of a motor club, shall use the organizational licensee number of that person’s employer.


5.  A person in violation of this section shall be subject to a fine levied by the commissioner in the amount of two hundred dollars ($200) for the first offense, five hundred dollars ($500) for the second offense, and one thousand dollars ($1,000) for the third and subsequent offenses. The penalty shall not exceed one thousand dollars ($1,000) for any one offense. These fines shall be deposited into the Insurance Fund.


6.  A separate penalty shall not be imposed upon each piece of printed material that fails to conform to the requirements of this section.


7.  If the commissioner finds that the failure of a licensee to comply with the provisions of subdivision (a) or (b) is due to reasonable cause or circumstance beyond the licensee’s control, and occurred notwithstanding the exercise of ordinary care and in the absence of willful neglect, the licensee may be relieved of the penalty in subdivision (e).


8.  A licensee seeking to be relieved of the penalty in subdivision (e) shall file with the department a statement with supporting documents setting forth the facts upon which the licensee bases its claims for relief.


9.  This section does not apply to a person or entity that is not currently required to be licensed by the department or that is exempted from licensure.


10.  This section does not apply to general advertisements of motor clubs that merely list insurance products as one of several services offered by the motor club, and do not provide any details of the insurance products.


11.  This section does not apply to life insurance policy illustrations required by Chapter 5.5 (commencing with Section 10509.950) of Part 2 of Division 2 or to life insurance cost indexes required by Chapter 5.6 (commencing with Section 10509.970) of Part 2 of Division 2.

CALIFORNIA INSURANCE CODE - SECTION 1726.

1.  A person who is licensed in this state as an insurance agent or broker, advertises insurance on the Internet, and transacts insurance in this state, shall identify all of the following information on the Internet, regardless of whether the insurance agent or broker maintains his or her Internet presence or if the presence is maintained on his or her behalf:
1. His or her name as it appears on his or her insurance license, and any fictitious name approved by the commissioner.
2. The state of his or her domicile and principal place of business.
3. His or her license number.


2.  A person shall be deemed to be transacting insurance in this state when the person advertises on the Internet, regardless of whether the insurance agent or broker maintains his or her Internet presence or if it is maintained on his or her behalf, and does any of the following:
1. Provides an insurance premium quote to a California resident.
2. Accepts an application for coverage from a California resident.
3. Communicates with a California resident regarding one or more terms of an agreement to provide insurance or an insurance policy.