Cal. Code Regs. tit. 10 § 2605.02

Current through Register 2024 Notice Reg. No. 24, June 14, 2024

Section 2605.02 - Amount of Proof Required

A. In the case of domestic applicants being organized for the purpose of assuming the risk of loss under contracts of insurance, the quantum of proof customarily needed pursuant to Insurance Code Section 839 must be sufficient to satisfy the commissioner of at least the following with respect to applicant:

1. That it has a practicable, workable organization and plan of operation with honest, experienced, competent persons in charge;

2. That it has actuarial sound policies to sell at merchantable rates;

3. That it will employ lawful sales methods;

4. That its underwriting and rating will be lawful and practicable;

5. That its reinsurance arrangements are provident and lawful;

6. That it has access to or can develop sufficient premium income to survive;

7. That it will promptly and fairly adjust claims by its policyholders and will fully pay such claims in accordance with law and the terms of the policies;

8. That its investments will be lawfully made and skillfully managed;

9. That its operations and business ought to produce a fair profit within a reasonable period; and

10. That its plan of financing and stock selling will produce enough funds so that applicant can and will maintain statutory financial requirements and avoid a hazardous condition until earned premium income plus investment income exceeds all expenditures. (Sections 717, 839, 843)

B. In the case of applicants described in paragraph C. of Section 2601.02 hereof other than those mentioned in paragraph A. of this section, the quantum or proof required shall be such as by a preponderance of evidence will enable the Commissioner to make all findings necessary or appropriate under the circumstances.

C. The quantum of proof required of foreign or alien applicants shall in no event be less than that required of a similar domestic applicant applying for a similar permit. (California Constitution, Article XII, Section 15.) The proceeds of California stock sales by such applications shall be subject to the impound requirements of these regulations the same as if they were domestic applicants. Cf. Section 2606.01, infra.

Cal. Code Regs. Tit. 10, § 2605.02