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HomeInsurance CodeDiv. 1Pt. 2Ch. 1Art. 3§ 715 Insurer Organization Cost Limits

§ 715 Insurer Organization Cost Limits

Insurance Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 715 Insurer Organization Cost Limits

The law bars the insurance commissioner from issuing a new certificate of authority to a domestic insurer if the costs to organize and promote the company are more than 12% of the money actually paid for its capital stock.

Key Takeaways

  • •New certificates are denied when organization/promotion costs exceed 12% of capital paid.
  • •Only renewal certificates may still be issued under this condition.
  • •The rule applies to domestic insurers organized directly or through a holding company.

Example

A newly formed insurance company spends $1.5 million on organization and promotion, and its capital stock was funded with $10 million.

Because $1.5 million is 15% of $10 million, which is above the 12% limit, the commissioner cannot issue a new certificate of authority for that insurer.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 715 Insurer Organization Cost Limits

The commissioner shall have no authority to issue a certificate of authority, other than a renewal certificate of authority, to any domestic insurer, whether organized and promoted directly or by means of a holding company, where the commissioner’s examination shows that the expense of organization and promotion, exclusive of attorney fees, accountant fees, and actuary fees, exceeds 12 percent of the total amount actually paid on its capital stock. (Amended by Stats. 1972, Ch. 196.)

Last verified: January 11, 2026

Key Terms

insurancecommissionmotionstockauthorityexaminationorganization

Related Statutes

  • § 705.1 Insurance Application Filing Fee
  • § 700 Insurance Business Licensing Requirements
  • § 700.02 Insurer Capital And Surplus Requirements
  • § 701 Insurer Certificate Revocation Rules
  • § 702 Insurer Internet Disclosure Requirements

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Insurance Code. Section 715.
View Official Source