CDI Revises Notice on Broker-Agent License Numbers in Emails

SACRAMENTO, CA, Jan. 11, 2023 - In response to criticisms tendered by IIABCal and three other producer organizations, the California Department of Insurance (CDI) has issued a Revised Notice clarifying its position on a new law that requires brokers and agents to include their license numbers in emails that involve insurance transactions.

Effective Jan. 1, 2023, California Insurance Code Section 1725.5(c) requires require producer license numbers to be included in all emails “… that involve an activity for which a license is required.”  However, in a Nov. 14 Notice announcing the new requirement, CDI created significant confusion when it offered, as examples of emails that it said required license numbers, a variety of “clerical activities” that under longstanding California law may be performed by unlicensed persons.  The Notice created the implication that licensing laws had been dramatically expanded.

On Dec. 22, CDI issued a revised Notice that addressed most of the concerns presented by IIABCal, the California Insurance Wholesalers Association (CIWA), the California Association of Health Insurance Professionals (CAHIP), and the National Association of lnsurance and Financial Advisors—California (NAIFA—California).  The revised Notice makes clear that the new law applies to non-resident, as well as resident, licensees, and expressly provides that messages involving clerical activities are not covered by the new law.  In practical effect, that means the original Notice was repealed—although the Department didn’t make that explicitly clear.

CDI refused to budge on its position that producers must include BOTH their individual license number, and the license number of the agency or other organization for which they are transacting insurance (assuming the producer is transacting insurance on behalf of an organizational licensee). 

IIABCal General Counsel Steve Young, writing on behalf of the four producer organizations, argued that the legislation creating this new requirement contemplated that either the individual number, or the organization number, should be included on emails—but not both.  CDI disagrees, and Young said the producer groups are now determining whether to formally challenge the Department’s interpretation.

“The Department wants consumers to be able to easily determine whether their agent or broker is licensed in good standing by the California Insurance Commissioner,” Young said.  “That’s a laudable objective, which is why we didn’t oppose the Department’s proposal in the Legislature last year.  But that law doesn’t say individual and organization numbers both need to appear, and we fail to understand what benefit obtains from including both.”

The complete text of Insurance Code Section 1725.5(c) provides:

(c) 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.