IIABCal Urges Changes to CDI Notice on Broker-Agent Emails

SACRAMENTO, CA, Dec. 5, 2022 - IIABCal and three other producer organizations have jointly urged the California Department of Insurance (CDI) to clarify misleading statements contained in a CDI Notice describing a new law that will require brokers and agents to include their license numbers in all emails that concern insurance transactions. 

Effective Jan. 1, 2023, SB 1242 amends California Insurance Code Section 1725.5 to require producer license numbers to be included in all emails “… that involve an activity for which a license is required.”  The insurance industry supported the new requirement, in part because it constituted a minor expansion of pre-existing requirements for license numbers to be posted on websites, business cards, written price quotations and print advertising distributed solely within California. 

However, in a Nov. 17 Notice announcing the new requirement that was sent to all resident and non-resident-licensed agents and brokers, the Department created significant confusion and alarm when it offered examples of emails that it said would require producer license numbers.  The examples included by CDI included communications that producer groups believe fall within the definition of “clerical activities” that may be performed without a license. 

“Unfortunately, the Bulletin has unintentionally created a firestorm of questions from all over the country about the scope of the new requirements,” IIABCal General Counsel Steve Young wrote to Commissioner Lara on behalf of IIABCal, the California Insurance Wholesalers Association (CIWA), the California Association of Health Insurance Professionals (CAHIP), and the National Association lnsurance and Financial Advisors—California (NAIFA—California).  

The Notice stated:  “Examples of emails that involve an activity for which a person must hold ... [a] license include, but are not limited to, emails that:  

  • Advertise a producer’s insurance business in general, or that advertise a specific policy offered by the producer;
  • Convey 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 premium; ….” 

The producer organizations urged CDI to issue a corrected notice, since many of the activities cited in the above examples involve “activities for which a license is either clearly not required, or arguably might not be required, depending on the precise content of the message,” Young wrote.     

“The California Insurance Code has long exempted the performance of mere ‘clerical activities’ from the need for licensing, and many years ago, CDI promulgated regulations defining the scope of that exemption….  We believe the activities described in the second, third and fourth bullets plainly fall within the definition of clerical activities that may be performed by unlicensed persons; therefore, no license number should be required.  And in the first bullet, we believe … that general, non-specific advertising does not rise to level of “solicitation,” which would require a licensed person,” Young said.   

The producer organizations provided a detailed suggestion for revising the Notice, and that “redline” proposal appears here.   As of December 5, 2022, CDI has indicated the suggestions are under review by their legal department. 

For more information about the “clerical activities” that may be performed by unlicensed persons, see the Question of the Month.