815-816

INSURANCE CODE
SECTION 815-816




815.  No insurer shall pay any representative given discretion as to
the settlement or adjustment of claims under life or disability
policies, whether in direct negotiation with the claimant or in
supervision of the person negotiating, a compensation which in any
way is contingent upon the amount of settlement of such claims.




816.  No insurer shall pay any person given discretion as to
settlement of claims under any policy of insurance, or surety bond,
whether in direct negotiation with the claimant or in supervision of
the person negotiating, a compensation which in any way is contingent
upon the amount of settlement of such claims, except as in this
section otherwise expressly provided.
   This section shall apply equally to a single claim, a number of
specified claims, an aggregate of claims during a specified period of
time or an aggregate of claims under any contract, agreement or
arrangement.
   This section shall not affect the interpretation or provisions of
Section 815.
   The word "person" as used in this section includes, but is not
limited to: employees, agents, brokers, representatives, general
agents, managing general agents, surplus line brokers, insureds,
coinsureds, adjusters and independent contractors but does not
include attorneys in fact or other exclusive managers of an insurer.
   This section does not apply to:
   (a) Compensation of a producer, managing general agent, surplus
line broker or general agent under any arrangement, agreement or
contract whereby the producer or general agent is not granted
discretion in the actual adjustment or settlement of any or all
individual claims settled for an amount exceeding five hundred
dollars ($500).
   (b) A producer, managing general agent, surplus line broker or
general agent who is compensated by a contingent commission
arrangement based wholly or partly on underwriting results, unless
the arrangement guarantees an agreed return to the insurer which may
exceed the underwriting profit actually earned by the insurer on
business written through the producer, managing general agent,
surplus line broker or general agent.
   (c) Contracts of reinsurance between insurers.
   (d) An arrangement, schedule of charges, agreement or contract,
express or implied, for the adjustment of claims under which the
compensation for the services of the person making the adjustment
(exclusive of reimbursement for actual expenses) consistently
increases, in reasonable brackets, as the amount paid in settlement
of a claim increases.
   An insurer which in any other jurisdiction is making payments
which would be in violation of this section if made in respect to
insurance business done in this state shall not be admitted to this
state until it presents evidence satisfactory to the commissioner
that it will not make such payments in this state and that it will
within one year after admission to this state cease to make any such
payments in any other jurisdiction and, within the same period,
terminate any contract or arrangement under which such payments are
to be paid. Failure to so cease such payments and to so terminate
such contracts and arrangements within such period of one year shall
constitute grounds for revocation of the insurer's certificate of
authority.