3.3 Forbidden Acts, Names, Recordkeeping, and Discipline

Forbidden Acts, Names, Recordkeeping, and Discipline

Quick Answer: File every true and fictitious name under CIC 1724.5 before you advertise it. Put your license number on cards, quotations, California print ads, and licensing-related emails (CIC 1725.5(a) and (c), applied by CIC 1821(c)). Keep the file the 10 CCR 2097–2104 list describes, at the office shown on the license, for five years after the transaction is fully done. CIC 1668 and Article 13 are how CDI takes the license away; CIC 1746 is not a current published section.

A Chapter 7 license is permission to handle other people's liberty and other people's money. The rest of the Insurance Code tells you what you may not call yourself, what you must write down, how fast you must talk to CDI, and how the commissioner removes people who will not. CIC 1821 is the bridge: it imports CIC 1724.5 (names), 1733–1735 (fiduciary, covered in Section 3.2), Article 6 (CIC 1666–1672, qualifications and denials), and Article 13 (CIC 1737–1748.5, discipline) into bail practice, and it imports most of CIC 1725.5's license-number rules.

Names and public-facing identity

CIC 1724.5. Every individual and organization licensee, and every applicant, shall file with the commissioner in writing the true name of the individual or organization and also all fictitious names under which the person conducts or intends to conduct business, and after licensing shall file any change in or discontinuance of those names. The commissioner may in writing disapprove the use of any true or fictitious name other than the bona fide natural name of an individual on any of these grounds:

• The name interferes with or is too similar to a name already filed and in use by another licensee.
• The use of the name may mislead the public in any respect.
• The name states, infers, or implies that the licensee is an insurer, motor club, hospital service plan, or entitled to engage in insurance activities not permitted under licenses held or applied for.
• The name states or implies that the licensee is an underwriter (with stated CLU/CPCU and trade-association exceptions that rarely help a bail DBA).
• The licensee has already filed and not discontinued more than two names including the true name, except that a licensee who lawfully purchased or succeeded to another licensee's business may use, for each such business, not more than two additional names that the predecessor used.

A licensee may not use a true or fictitious name after written notice that the use is contrary to CIC 1724.5. If facts in mitigation exist, the commissioner may permit continued use for a specified reasonable period, in writing, with conditions that protect the public. CIC 1811(k) charges $32 to file a name under 1724.5 unless the name is in an original application.

CIC 1802.2 is the bail-specific successor rule: a bail licensee who has purchased or succeeded to the bona fide business of another bail licensee may use a true or fictitious name the predecessor used if the predecessor conducted the business for two consecutive years or more.

CDI's operational path for a DBA is the LIC 447-42A name-approval request, then, within one year after approval, a newspaper posting, the county clerk fictitious-business-name filing, and an underwriter's agreement from the surety. Do not advertise the DBA while it is still only a hoped-for name on a yellow pad.

CIC 1800.75 and 1800(c) (covered in Section 3.1) remain the unlicensed-advertising and solicitation rules. Holding out as a bail business without the license is its own violation even if no premium changes hands.

CIC 1725.5 as applied by CIC 1821(c). Subdivisions (a), (c), (e), (f), (g), and (h) apply to Chapter 7 licensees. Practical result: affix, type, or print the license number on business cards, written price quotations for insurance products, and print advertisements distributed exclusively in this state, in a type size at least as large as any indicated telephone number, address, or fax number, or 12-point type, or 8-point type for business cards, whichever is larger. Include the license number in emails that involve an activity for which a license is required, in a type size no smaller than the largest telephone number, street address, or email address in the email, adjacent to or on the line below the individual's name or title. First offense $200, second $500, third and subsequent $1,000, deposited in the Insurance Fund, with a $1,000 cap for any one offense and no separate penalty for each nonconforming piece. Reasonable cause or circumstances beyond the licensee's control, with ordinary care and without willful neglect, can support relief if the licensee files a statement with supporting documents. CIC 1821(c) does not import 1725.5(b)'s requirement to print the word "Insurance."

CIC 1820 and 1822. The license shall be prominently displayed in the office of the licensee. Change the business address in writing with the commissioner. An examiner who cannot find the license on the wall already has a Chapter 7 violation before opening a file drawer.

Forbidden acts and the denial/discipline engine

CIC 1736. If the code forbids an act or prescribes conduct, both the organization and any person named to exercise the powers under an organization license shall not perform the forbidden act and shall follow the prescribed conduct. Naming a corporation does not create a liability shield for the designated natural persons.

CIC 1736.5. Every licensee and applicant shall promptly reply in writing to an inquiry from the commissioner relative to an application, retention or renewal, a consumer-complaint investigation, or a 1729.2 background-reporting matter. "Promptly reply" means the commissioner receives the written response no later than 21 days after the inquiry was mailed or otherwise communicated. The commissioner may revoke, suspend, or refuse to issue or renew for failure to reply. Silence is its own ground.

CIC 1729.2. An applicant or licensee shall notify the commissioner when specified background information changes after the application is submitted or the license is issued. If the licensee is an endorsee on a business-entity license, the licensee also notifies any officer, director, or partner listed on that entity license. A business-entity licensee who learns of a change as to an unlicensed person listed on its license must notify the commissioner. "Background information" includes a misdemeanor or felony conviction; filing of felony criminal charges; an administrative action regarding a professional license (or conduct for which a license was required but not possessed); an administrative or civil action filed by or on behalf of a government or regulatory agency alleging unlawful conduct; a bankruptcy discharge or attempted discharge of insurance premiums or fiduciary funds; and any admission or judicial finding of fraud, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty. Notice is in writing and is sent within 30 days of the date the applicant or licensee learns of the change. Chapter 7 is inside the definition of "license." AB 487 (Stats. 2025, Ch. 558, effective January 1, 2026) is the current amendment; do not rely on older 10-day outlines.

CIC 1668 — grounds the commissioner may use to deny. Article 6 applies to Chapter 7 through CIC 1821(b). High-yield 1668 grounds include: not properly qualified; granting the license would be against public interest; no intent to carry on the permitted transactions in good faith with the general public; bad business reputation; lacking in integrity; a professional license refused, suspended, or revoked for reasons that should preclude this license; seeking the license to avoid insurance laws; knowing or willful misstatement in the application or supporting documents, or false sworn testimony; prior fraudulent practice or dishonest business; incompetency or untrustworthiness, or a wrongful act exposing the public to danger of loss; knowing misrepresentation of a policy or contract; failure to perform a duty the code enjoins or commission of a forbidden act; conviction of a felony, a misdemeanor specified by the Insurance Code or other insurance-regulating laws, or a public offense that has as a necessary element a fraudulent act or an act of dishonesty in acceptance, custody, or payment of money or property; aiding or abetting a person in conduct that would support suspension, revocation, or refusal; permitting an employee to violate the code; violating a law regulating a business that could lawfully be done only under the license; a false or fraudulent CIC 1749.5(d) certificate; and civil liability by clear and convincing evidence for elder or dependent abuse, oppression, fraud, malice, misappropriation or conversion, misrepresentation, or breach of fiduciary duty. A judgment, plea, or verdict of guilty, or a plea of nolo contendere, is a conviction.

CIC 1668.5 extends parallel grounds to a controlling person of an organization applicant or organization licensee (more than 10 percent of voting securities is a rebuttable presumption of control). CDI can deny the entity, or suspend or revoke its permanent license under CIC 1738, because of the controlling person.

CIC 1669 — no hearing. The commissioner may, without hearing, deny an application if the applicant has been convicted of a felony; convicted of a misdemeanor specified by this code or other insurance-regulating laws; had a previous professional license denied for cause within five years of the application date on grounds that should preclude a CDI license; or had a previously issued professional license suspended or revoked for cause within that same five-year window. Guilty, nolo, or a verdict of guilty counts. If the order is based on a plea that does not result in a judgment of conviction, the commissioner shall vacate the order upon petition.

CIC 1670. If, within one year from CDI's receipt of the application (complete or not), or within one year from issuance of a certificate of convenience, whichever is later, the applicant neither fully qualifies for and receives the permanent license nor is denied, the application is automatically denied without prejudice to a new filing, unless in a statement-of-issues proceeding the commissioner finds good cause to set aside or stay the denial. Stats. 2025, Ch. 558 (AB 487) is the current text.

Article 13 (CIC 1737–1748.5). CIC 1737 states the purpose: protect the public by requiring and maintaining professional standards of conduct. CIC 1738 lets the commissioner suspend or revoke a permanent license on any Article 6 ground that would support denial; when those grounds say "applicant," read "the holder of a permanent license." A suspension or revocation based on a CIC 1669 ground may be without notice or hearing. Any other permanent-license (non-restricted) suspension or revocation is after APA notice and hearing. CIC 1738.5 accelerates proceedings that involve alleged misconduct against a person age 65 or over toward a 90-day hearing, subject to listed continuance grounds.

Other Article 13 tools the exam actually tests:

• CIC 1739: On an organization license, both the organization and named natural persons are holders. The commissioner may proceed against the entity, the individual, or both.
• CIC 1741: After hearing, the commissioner may order the licensee to prove qualifications by retaking and passing the qualifying exam, in lieu of or (except in a revocation) in addition to other action. Failure terminates all licenses to which that exam applies.
• CIC 1742: Instead of an unrestricted license, the commissioner may, after hearing, issue a restricted license with reasonable conditions. The holder has no property right in it. The commissioner may suspend or revoke a restricted license with or without hearing or cause. Restricted licenses still renew on the same cycle and fees as unrestricted licenses in the same capacity.
• CIC 1743: Lapse, nonrenewal, or voluntary surrender does not deprive the commissioner of jurisdiction to discipline. No disciplinary proceeding may be instituted after five years from termination of the license.
• CIC 1748: In any Article 13 proceeding the commissioner may, by alternative order, let the licensee elect in writing to pay a specified money penalty in lieu of suspension or other permitted action. Caps: $4,000 per offense; $20,000 aggregate for all offenses in one proceeding; 30 percent of gross commissions on insurance transacted in the preceding calendar year; or any amount proven or admitted to have been received and retained in violation of the code. The commissioner is not required to pick the smallest of those four. Unpaid penalties can support denial, suspension, or revocation, and the balance must be paid before reinstatement or a new license.
• CIC 1748.5: After notice and hearing, the commissioner may remove a "subject person" from office or employment with a production agency (the definition includes Chapter 7) and prohibit participation in the business of an insurer or production agency, except with prior consent, when misconduct caused injury or when fraud or willful dishonesty exposed a person to injury, and the conduct demonstrates unfitness. Immediate suspension or removal is available in the solvency/irreparable-injury and certain charging-document or five-year-conviction settings the statute describes. Violating a prohibition order can draw a civil penalty up to $1,000 per day; a production agency that knowingly aids and abets faces up to $1,000 per day with a $50,000 maximum. Continuation of salary or benefits pending final disposition is not aiding and abetting.

CIC 1806, 1807, 1807.5, 1813, and 1814 remain available on the Chapter 7 side: unfit-person suspension or revocation, 15-day temporary suspension pending hearing, Article 13 procedures for Chapter 7 violations, and the $10,000 / one-year public-offense penalty.

The current official Insurance Code does not publish a Section 1746. Older outlines and some third-party bail charts still cite "CIC 1746" for recordkeeping. Do not invent a 1746 duty, retention period, or penalty. Use CIC 1812 (rulemaking), 10 CCR 2097–2104 (the actual bail record rules), CIC 1727 (producer record rule that 1747 enforces for agents and brokers), CIC 1820 (display), and Article 13. CIC 1745 is likewise unpublished in the current Article 13 sequence.

Recordkeeping, inspection, and maintenance (10 CCR 2097–2104)

CIC 1812 authorizes the commissioner to make reasonable Chapter 7 rules. Title 10, California Code of Regulations, Article 2.1 implements them. The record cluster the educational objectives list is 10 CCR 2097 through 2104.

10 CCR 2097. Every bail licensee shall retain in the licensee's records the original or duplicate original of any written request from the arrestee or a person acting on the arrestee's behalf that resulted in the posting of bail, and the application for bail signed by the arrestee or the person negotiating bail on the arrestee's behalf.

10 CCR 2098. If the licensee arranged for the posting of bail, the licensee shall retain a copy of: the document(s) that furnished the 10 CCR 2083 information; the collateral receipt or related agreement described in 10 CCR 2083(m); the 10 CCR 2083.1 additional-charges document; any written representation to a court or public official on 10 CCR 2091 matters; any guarantor's agreement; all documents signed by the arrestee or any person with whom bail is negotiated, the originals of which are not retained; and all documents delivered to the arrestee or any person with whom bail is negotiated.

10 CCR 2099. Tender a copy of any document executed by any person with whom bail is negotiated to that person at the time of execution. Keep-the-original-and-hope-they-ask-later is not compliance.

10 CCR 2100. Every bail agent or permittee shall keep complete records of all business done under the agent's or permittee's license or under the license of any solicitor, agent, or permittee employed by that agent or permittee. All records, including documents and copies, shall be open to inspection or examination by the commissioner or the commissioner's representatives at all reasonable times, at the principal place of business designated in the license. The record of each transaction, whether on a required form or in a separate book, ledger, or card record, must include at least:

• Full name and address of the arrestee.
• Date of arrest, charged offense, penal amount of bail, premium or amount charged, date the bail was filed or delivered, and the court or public official before whom the arrestee must appear.
• Full name and address of the person who furnished information leading to the solicitation or negotiation, date and time received, manner received, that person's connection to the arrestee if the source is not the arrestee, and who received the information.
• If negotiated with someone other than the arrestee: that person's full name, address, and relationship, and who negotiated for the licensee.
• If negotiated directly with the arrestee: a full statement of how the arrestee communicated and who received the communication.
• Full name and address of every person directly or indirectly paying, promising to pay, or guaranteeing premium, guard fees, extraordinary-service charges, or collateral.
• Any bail licensee from whom the business was accepted or to whom commission was promised or paid, and the amount.
• Any person who received or was promised any portion of premium, guard fee, charge, or commission, or who was compensated in any manner on the transaction.
• If any valuable consideration other than money was received, a full explanation.
• On a writ bond, the attorney's name appearing thereon.
• A separate book record of collateral: date received, from whom, by whom, complete description, amount of bail and premium guaranteed, disposition, and if returned, date and to whom.

10 CCR 2101. Partners conducting business under 10 CCR 2061 may combine books and make a joint forms filing, but the books must identify which partner transacted each transaction or portion.

10 CCR 2102. Except as 10 CCR 2101.1–2101.3 provide, every agent and permittee shall use the forms and documents filed with the commissioner as an individual and is individually responsible for proper entries and retention.

10 CCR 2103. A licensee may collect extra information or extra signatures, but if they sit on the same document as required information they must be clearly severable, and the licensee may omit the extra portion in use.

10 CCR 2104. Five years after the final completion of all parts of a bail transaction, a bail licensee may destroy the records pertaining to that transaction. "Final completion of all parts" is later than posting, later than the next court date, and later than a still-open forfeiture, collateral hold, or unpaid premium dispute. Destroying a file because the defendant appeared last year is the classic 2104 miss if collateral has not been returned or a 1305 motion is still pending.

CIC 1727 requires the commissioner, after notice and hearing, to specify by regulation the manner, type, and location of records for persons acting as insurance agents and brokers, and those records shall be open to inspection at all times. CIC 1747 lets the commissioner order a property or casualty broker-agent who has not kept 1727 records to complete them within 60 days; failure is a suspension or revocation ground. Teach 1727/1747 as the producer analog. For bail files, quote 10 CCR 2097–2104 and CIC 1812.

California scenarios

The insurer-sounding DBA. A new Compton agent files "Pacific Coast Surety of California" as a fictitious name. CIC 1724.5(c) lets the commissioner disapprove a name that infers the licensee is an insurer. CIC 1724.5(e) independently caps the person at two names including the true name. Run the name through LIC 447-42A before the jail flyer is printed.

The missing 30-day letter. An agent is charged with felony identity theft on June 1 and "was going to mention it at renewal in November." CIC 1729.2 requires written notice within 30 days of learning of the filing of felony criminal charges. Renewal is not the deadline. CIC 1668(m) and 1669(a) then supply the conviction grounds; 1738 can take a permanent license on those same grounds.

The unread CDI email. A 1736.5 inquiry goes to the address on file on March 1. The agent is on a recovery trip and answers on day 28. The statute measures receipt by the commissioner, not good intentions, and 21 days is the published period. CIC 1822's address-change duty is what makes the 21-day clock fair.

The two-year shred. An office manager in San Bernardino County shreds closed files "after two years, like real-estate brokers." 10 CCR 2104 is five years after final completion of all parts. A 2021 posting with collateral returned only in 2024 was not completable in 2023. 10 CCR 2100 still required the file to be at the principal office, open to inspection, including the separate collateral book.

Restricted versus gone. After a trust-account shortage, CDI offers a restricted license under CIC 1742 with a condition of monthly trust reconciliations. The agent treats it as a property right and ignores a later condition. Restricted licenses have no property right; they can be pulled with or without hearing or cause. Unpaid CIC 1748 money penalties also block reinstatement.

Traps

• CIC 1746 is not currently published. If a question recites "CIC 1746 requires…" and offers a number the current code does not state, do not invent it; apply 10 CCR 2097–2104 and CIC 1812.
• Two names including the true name is the 1724.5(e) default cap, not two DBAs plus the true name.
• 1729.2 is 30 days from learning of the change; 1736.5 is 21 days from the commissioner's inquiry. Do not swap them.
• 1669 no-hearing denial is limited to the listed convictions and five-year foreign-license events. Other 1668 grounds still get a hearing, except as 1738 restates the 1669 shortcut for holders.
• 10 CCR 2104's five years run from final completion of all parts, not from posting and not from the two-year license term.
• CIC 1821(c) imports license-number display, not the word "Insurance."
• CIC 1748's four penalty ceilings are alternatives the commissioner may choose among; the smallest number is not automatic.
• A surrendered or expired license is still disciplinable for five years (CIC 1743).