In the midst of the devastating and ongoing Los Angeles wildfires, on January 9, 2025, Insurance Commissioner Ricardo Lara issued the 2025 Annual Notice on behalf of the California Department of Insurance (DOI). The 2025 Annual Notice highlights what Commissioner Lara describes as “the most significant California laws pertaining to property insurance policies, including those
Navigating the complex landscape of California’s insurance regulations, particularly when dealing with non-admitted insurers, is a challenge many policyholders face. At the heart of the non-admitted insurer challenge lies a powerful but underutilized tool: The Unauthorized Insurers Process Act, codified at California Insurance Code Section 1610, et seq. Section 1616, is a key component of the Act and yet is often overlooked by policyholders faced with a coverage dispute involving a non-admitted insurer.
Admitted versus non-admitted insurers in California
An “admitted” or “licensed” insurer is an insurance company that must file its rates with the Department of Insurance (“DOI”) and is required to participate in the California Insurance Guarantee Association (“CIGA”). In the event that an admitted insurer becomes insolvent, CIGA is supposed to step in and pay covered claims, subject to various statutory limitations.
Conversely, a “non-admitted” or “surplus lines” insurer is allowed to conduct business in California but is not required to file its rates with the DOI and is not a member of CIGA. By not filing rates with the DOI, non-admitted insurers sometimes have more flexibility in the coverage offered and the prices charged. The DOI maintains a List of Approved Surplus Lines Insurers (“LASLI”) that has met certain capitalization requirements, but the DOI also permits non-U.S. domiciled alien insurers to issue coverage in California that has not met those standards. Thus, the financial strength and stability of a non-admitted insurer can sometimes be significant issues.Continue Reading Empowering policyholders: Forcing non-admitted insurers to post a bond before answering a complaint
Strong environmental, social and corporate governance (ESG) business policies are critical to address the fluctuating, unprecedented risks in this changing climate. Any company planning to expand and thrive in the next few decades must evaluate its collective conscientiousness for social and environmental factors, including preparing for the social and market upheavals resulting from greenhouse gas emissions, gender and diversity policies, and shareholder interest in income equality. Implementing forward-looking ESG policies is vital to a modern company’s success, and its retention and management of a socially conscious workforce and investor pool.
Obtaining insurance coverage in this climate of activist shareholders
The evolving ESG landscape requires companies to plan for claims that did not exist just a few years ago. Shareholders are actively requiring boards to be more transparent and responsive to ESG issues, and regulators are enforcing new disclosure requirements. Sometimes disclosure alone is not enough: businesses are scrutinized by shareholders and regulatory entities for underestimating their environmental impact, or over promising their efforts to minimize climate change contributions, known as greenwashing.
Even companies doing their best in ESG governance face the risk of shareholder and regulatory litigation. These risks can be addressed by directors and officers insurance coverage, which generally protects companies, their directors, managers and employees against claims for a “wrongful act.” Unless excluded as a specific type of claim, companies routinely look to their D&O policies to address shareholder claims and defray the costs of regulatory investigations.Continue Reading D&O insurance to counter ESG litigation – new issues for insurers and policyholders