California Administrative Code, Title 10, Chapter 5, Subchapter 1
Article 7. Production Agency Records
§ 2190 Authority
These regulations are promulgated pursuant to the authority granted the Commissioner under the provisions of Section 1727 of the Insurance Code. They shall apply to every agent or broker licensed by the Commissioner.
§ 2190.05 Definitions
The term “ agent” as used in these regulations, means a person authorized by and on behalf of an insurer to transact insurance and does not include life agent. The term “broker” means a person who, for compensation and on behalf of another person, transacts insurance other than life with, but not on behalf of, an insurer. The term “secondary office” means an office of a resident agent or broker other than the principal office.
§ 2190.1 General
- (a) All record-keeping systems, whether manual or mechanical, must provide an audit trail so that details underlying the summary data, such as invoices, checks, and statements, may be identified and made available on request. All such systems must provide the means to trace any transaction back to its original source or forward to final entry, such is accomplished by a conventional double-entry bookkeeping system. When automatic data processing systems are used, a description of the system must be available for review by the Department.
- This description must contain statements and illustrations sufficiently detailed to indicate the application or process being performed, the procedures employed in each application or process (such as flow charts, block diagrams or other satisfactory description of input or output procedures) and the controls used to insured accurate and reliable processing.
- (b) All record-keeping systems, including automatic data processing systems and computer output microfilms, must be designated and programmed to produce the required information in an intelligible form. Identification of coding systems shall be readily available whenever they are used to record and maintain any of the information required under Sections 2190.2, 2190.3, and 2190.4.
§ 2190 .2 Required Records
Whenever applicable, the following records shall be maintained by every agent or broker with respect to each and every transaction:
- (a) Name of insured
- (b) Name of insurer
- (c) Policy number
- (d) Effective date, termination date and mid-term cancellation date of coverage
- (e) Amount of gross premium
- (f) Amount of net premium
- (g) Amount of commission and basis on which computed
- (h) Names of persons who receive, or are promised, any commissions or other valuable consideration related to the transaction
- (i) Amount of premium received including any itemization of any partial payments or additional premium
- (j) Dated premium received by agent or broker
- (k) Date deposited in the trustee bank account or bank depository
- (l) Name and address of and number of trustee account in which premium is deposited
- (m) Date premium paid by the agent or broker to the person entitled thereto and identification of the means of transmittal
- (n) Amount of net and gross return premium
- (o) Date return premium is received from insurer by agent or broker which may be the date the credit is taken from the insurer or the date the check or draft is received, and
- (p) Date gross premium is remitted to person entitled there to by agent and broker and identification of means of transmittal.
§ 2190.3 Records by File
Whenever applicable, the following records shall be maintained by every agent or broker in a file pertaining to a particular insured:
- (a) Identity of each person who transacted the insurance, renewals and any change in coverage
- (b) Records of all binders, whether written or oral, showing the names of insured and insurer, name of coverage, effective and termination dates, and premium for binder of policy to be issued
- (c) Copy of application or memorandum of request for insurance, and
- (d) Correspondence received, copies correspondence, sent memoranda, notes of conversation, or any other record necessary to describe the transaction.
§ 2190.4 Direct Billing
With respect to any business transacted on a direct billing basis, the following records may be maintained in lieu of the records required by Section 2190.2:
- (a) A policy record card or sheet or declaration page
- (b) Copies of premium payment receipts or other memoranda thereof for premiums collected when collected by the agent or broker
- (c) Records of premium payments made by the agent or broker
- (d) Copies of memoranda of any additional or return premium received by the agent or broker
- (e) Monthly or other periodic statements from the insurer showing premium receipts on the agent’s or broker’s business, and
- (f) Copy of any cancellation notice or letter of cancellation notice, or letter of cancellation for cause.
§ 2190.5 Bank Records
The following bank records shall be maintained at all times:
- (a) Periodic statements of account supplied by the bank for all trustee accounts or depositories maintained pursuant to Sections 1734 or 1735 of the Insurance Code.
- (b) Records of all deposits made into such trustee accounts or depositories, and
- (c) Cancelled checks drawn on, or records of withdrawal of funds from, such trustee accounts or depositories.
§ 2190.6 Interest Bearing Accounts
Whenever a principal has authorized an agent or broker to maintain funds received in a fiduciary capacity, as defined in Sections 1733 and 1734 of the Insurance Code, in an interest bearing account and to retain interest earned (i.e., savings account or certificate of deposit), such authorization shall be in writing and the original thereof shall at all times be maintained as part of the pertinent records of the agent or broker and shall be readily available on request, for so long as fiduciary funds are so maintained for such insurer.
§ 2190.7 Place Where Records Kept
- (a) All records described in Sections 2190.2, 2190.4, 2190.5 and 2190.6 shall be kept in the principal office in the State of the resident agent or broker except where otherwise specifically authorized by the commissioner
- (b) All records described by Section 2190.3 shall be maintained at the office servicing the insured
- (c) An agent operating under an exclusive contract with an insurer, including one insurer and its subsidiaries or affiliates, shall, upon termination of the appointment, be required to maintain only such records as such contract authorizes him to retain, provided that the insurer shall bear the responsibility of maintaining within this State all other records which would have otherwise been required to be maintained by the agent, subject to the time limitations set forth in Section 2190.8
- (d) All records shall be maintained in an orderly manner so that the information therein is readily available and shall be open to inspection or examination of the commissioner at all times and the commissioner may at any time require such licensee to furnish him any information maintained or required to be maintained
- (e) One year after cancellation or expiration of a policy, records pertaining thereto may be stored off premises so long as they are retrievable within two business days
- (f) An agent or broker may maintain the records, which are otherwise required by this article to be kept at the principal office, at a secondary office upon obtaining specific written authorization from the Insurance Commissioner, which authorization may impose any conditions or restrictions which the Insurance Commissioner deems to be necessary and proper.
§ 2190.8 Retention Period
- (a) All records specified in Sections 2190.2 and 2190.4 (a), (b), (c), (d), and (f) shall be maintained for at least five years after expiration or cancellation date of the policy to which the records pertain
- (b) All records specified in Section 2190.3 shall be maintained for a period of eighteen months after the transaction described by such records
- (c) All records specified in Section 2190.4(e) and 2190.5 shall be maintained for at least five years.