Opinion ID: 4117706
Heading Depth: 2
Heading Rank: 2

Heading: The Unfair Insurance Practices Act

Text: In 1959, the Legislature enacted the Unfair Insurance Practices Act (UIPA) (Ins. Code, § 790 et seq.). Its purpose is to regulate trade practices in the business of insurance ―by defining, or providing for the determination of, all such practices in this State which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined.‖ (Ins. Code, § 790.)2 Section 790.03 ―define[s]‖ various unfair methods of competition and unfair or deceptive acts or practices, including (as pertinent here) ―[m]aking or disseminating or causing to be made or disseminated before the public in this state, in . . . any . . . manner or means whatsoever, any statement containing any assertion, representation, or statement with respect to the business of insurance or with respect to any person in the conduct of his or her insurance business, which is untrue, deceptive, or misleading, and which is known, or which (footnote continued from previous page) exercise of reasonable care should be known to be misleading, pursuant to Insurance Code section 790.03. ―(k) When an insurer identifies one or more specific sources or tools that a broker-agent must use to create an estimate of replacement cost, ―(1) the insurer shall prescribe complete written procedures to be followed by broker-agents when they use the sources or tools, ―(2) the insurer shall provide the broker-agent with the training and written training materials necessary to properly utilize the sources or tools according to the insurer's prescribed procedures, and ―(3) the insurer, and not the broker-agent, shall be responsible for any noncompliance with this Section 2695.183 that results from the failure of the estimate to satisfy the requirements of subdivisions (a) through (e), unless that noncompliance results from failure by the broker-agent to follow the insurer's prescribed written procedures when using the source or tool.‖ (Cal. Code Regs., § 2695.183, subds. (a)-(j).) 2 All further undesignated statutory references are to the Insurance Code. 9 by the exercise of reasonable case should be known, to be untrue, deceptive, or misleading.‖ (§ 790.03, subd. (b).) Empowered by authority granted in the UIPA, the Commissioner may investigate those engaged in the business of insurance. Through such investigation, the Commissioner can determine whether insurance companies are or have been engaged ―in any unfair method of competition or in any unfair or deceptive act or practice prohibited by Section 790.03 or determined pursuant to this article to be an unfair method of competition or an unfair or deceptive practice in the business of insurance.‖ (§ 790.04.) The Commissioner may bring an administrative enforcement action against, recover damages from, and enjoin any person who is or has been engaged ―in any unfair method of competition or any unfair or deceptive act or practice defined in Section 790.03.‖ (§ 790.05; see § 790.035.) A separate statutory provision applies where the Commissioner believes a method of competition, act, or business practice ―not defined in Section 790.03‖ nonetheless ―should be declared to be unfair or deceptive.‖ (§ 790.06.) The Commissioner may issue an order to show cause and initiate an administrative proceeding to determine whether the challenged conduct is unfair or deceptive — and, if determined to be unfair or deceptive, serve a written report so declaring on the insurer. (Id., subd. (a).) When proceeding under this provision, the Commissioner lacks the administrative authority to assess monetary penalties against the insurer or enjoin the conduct, but must instead apply (through the Attorney General) to the superior court for an injunction. (Id., subds. (b), (d).) Finally, the UIPA grants the Commissioner rulemaking power: ―The commissioner shall, from time to time as conditions warrant, after notice and public hearing, promulgate reasonable rules and regulations, and amendments and additions thereto, as are necessary to administer this article.‖ (§ 790.10.) 10