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California Law (Last Updated: March 4, 2014) |
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Insurance Code - INS |
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Division 2. CLASSES OF INSURANCE |
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Part 2. LIFE AND DISABILITY INSURANCE |
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Chapter 5. General Regulation of Life Insurers |
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ARTICLE 1. Restrictions on Business |
Section 10434.
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(a) An admitted life insurer shall not pay or contract to pay, directly or indirectly, to any of the parties specified in subdivision (b) any commission or other compensation contingent upon any of the following acts:
(1) The writing or procuring of any policy of life, disability or both classes of insurance issued by the insurer.
(2) Procuring an application therefor by any person.
(3) The payment of any renewal premium or the assumption of any life, disability or both of these classes of insurance by the insurer.
(b) It shall not pay this compensation to:
(1) Its president.
(2) Its vice president.
(3) Its secretary.
(4) Its treasurer.
(5) Its actuary.
(6) Its medical director or other physician charged with the duty of examining risks or applications for any of these classes of insurance.
(7) Any member of its board of directors, except when that compensation to be paid to the director would be less than the lesser of 1 percent of the insurer's statutory net gain from operations or 1 percent of commissions on premiums and annuity considerations for the preceding calendar year. This exception shall not apply when more than two of the members of the board of directors of the insurer, when the total number of board members is more than 10, or more than one of the members of the board of directors of the insurer, when the total number of board members is less than 10, would receive that compensation, nor shall this exception apply to any director who has served more than two years as a director. Any director receiving compensation pursuant to this paragraph shall be ineligible to vote on all matters directly relating to that compensation and shall not be counted for purposes of a quorum as to those matters.
(8) Any officer of the insurer other than its agent or solicitor.
(c) Nothing in this article shall prevent the payment of compensation to an officer of the insurer based upon the aggregate amounts of insurance issued by the insurer, or issued and in force, during any specified period if the officer is not directly responsible for recommending, underwriting, rating, or otherwise approving the acceptability of insurance risks.