Insurance professionals in California will need to take note of a new law going into effect on January 1, 2023. California Insurance Code section 1725.5 was amended by SB 1242 and requires most insurance producers to include their license number in their email signature. Before Senate Bill 1242 was signed into law, agents and brokers were required by statute to include their license numbers on business cards, premium quotes and print advertisements for insurance products distributed exclusively in California. Now, that mandate is being extended to emails.
The law requires specified licensees to include their license numbers in the emails the person sends that involve activity for which a license is required. A published letter from Insurance Commissioner, Ricardo Lara, outlines the following types of emails as examples of those that would be included in the new law. The following list is not exhaustive:
- "Advertise a producer's insurance business in general, or that advertise a specific policy offered by the producer.
- Cover a premium quote or mention any other provision of a current, past, or potential policy.
- Request rating or underwriting information from an insured or prospective insured.
- Request payment of premiums.
- In the case of an independent adjuster or public adjuster, ask a claimant for claim information, or provide information about a claim or filing a claim." https://www.insurance.ca.gov/0200-industry/0110-whats-new/upload/New-Law-Requires-Licensees-to-Include-Their-License-Number-on-Emails.pdf
The law applies to:
- Property broker-agents
- Casualty broker agents
- Life agents
- Accident and health or sickness agents
- Personal lines agents
- Limited lines automobile insurance agents
- Surplus lines brokers
- Independent insurance adjusters
- Life and disability insurance analysts
Details About the Listing of the License
The license number must be at least the same font size as the largest font size of any other line in the signature. For example if an email and phone number are in 12 point font, then the license number must also be at least that large. In addition, the license number should be listed on the line below the person's name and/or title. If it is an organization, the license number should appear on the line adjacent to or directly below the organization's name. If the email is from more than one licensed agent, the license numbers of all persons involved in the email must be included.
New Fraud Reporting Requirements
Current law established a Fraud Division within the Department of Insurance. The purpose of this division is to investigate fraudulent claims. Starting in January 2023, Senate Bill 1242 amends the law to require agents and brokers who suspect or know a fraudulent application for insurance has been submitted to report the potential fraud to the California Department of Insurance Fraud Division. The report should be submitted electronically via the Consumer Fraud Reporting Portal. The application must include information outlining the factual circumstance surrounding the suspected fraudulent application and any known misrepresentations it includes. The report must be made within sixty days of the date the agent or broker first suspected that fraud occurred. The report may not be made anonymously.
The agent or broker will also be under obligation to report any suspected fraud to the impacted insurer(s) as well. They should also comply with any requests for documents or other evidence that the insurer may require in conducting its own investigation. It is important to note, that agents and brokers reporting suspected fraud in good faith will not be subject to civil liability should it be discovered that fraud did not in fact take place.
Lastly, beginning on March 1, 2023, California licensed brokers and agents will be required to complete one hour of continuing education on the topic of fraud. All of these measures support Department of Insurance efforts to most proactively reduce the instances of fraud and misrepresentation in insurance applications and claims.
The attorneys at WSHB are available to answer any questions or concerns you may have in regard to these changes in the law. Please do not hesitate to reach out to a member of our team for assistance.