These reporting requirements also apply to any natural person named under a business entity license or application, regardless of licensure status.

Licenses and applicants must report the following changes in background status within 30 days:

• Any felony or misdemeanor conviction, including citations or traffic violations classified as such;
• A filing of felony criminal charges in state or federal court;
• Administrative actions regarding any professional or occupational license;
• Discharge or attempt to discharge in a personal or organizational bankruptcy proceeding, an obligation regarding any insurance premiums or fiduciary funds owed to any company, including a managing general agent or premium finance company; and
• Any admission, or judicial finding or determination of fraud, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty.

Failure to report changes in background within the timeframe is grounds for discipline and may result in a revocation, suspension, or restriction of a license. For applicants, it may result in the denial of the application or the issuance of a restricted license and fines.

Required reportable background changes must be submitted to the CDI through the Background Change Disclosure Form and Instructions on the CDI website or the National Insurance Producer Registry (NIPR) warehouse for Reporting of Actions.

As a best practice, insurance companies are encouraged to perform periodic background checks or ongoing monitoring of their agents and licensees. Criminal, civil, sanctions and professional license or designation searches are recommended to ensure that any issues are identified and reported as appropriate.

BIG clients with questions about this bulletin related to their background screening program should contact their account management team for support. Questions may also be directed to the CDI's Licensing Background Bureau at (916) 492-3650.

Source: California Department of Insurance Bulletin

Posted: March 31, 2023

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