Section 2507.2 - Prohibition Against Unfair Forfeiture of Dividend for Failure to Renew(a) Forfeiture of a right to, reduction in the amount of, or delay in the payment of, a policyholder's dividend due to the policyholder's failure to accept renewal of the policy or subsequent policies offered by the same insurer is coercive and illegal and shall constitute an unfair practice.(b) This section shall not be deemed to prohibit a reasonable reduction in the amount of a policyholder dividend if: (1) the policyholder has elected to be considered for policyholder dividends under a plan which utilizes the premium and loss experience of the policyholder for two or more policy years, and(2) the nature of the adjustment is set forth in the policy or by an endorsement attached to the policy within thirty days after the inception of the first policy year for which such election has been made, and(3) the policyholder does not remain insured by the same insurer during the complete term of the multi-year dividend plan. In the context of this paragraph, a "reasonable reduction" in the amount of policyholder dividends is defined as and specifically limited to the application of that most favorable dividend plan for which the policyholder then qualifies under the dividend procedures of the insurer unless some alternative dividend plan has been set forth in the policy or an endorsement.Cal. Code Regs. Tit. 10, § 2507.2
1. Amendment filed 4-2-85; effective thirtieth day thereafter (Register 85, No. 14).
2. Change without regulatory effect amending subsection (b) and NOTE filed 1-8-2015 pursuant to section 100, title 1, California Code of Regulations (Register 2015, No. 2).
3. Amendment of subsections (b)(2)-(3) and repealer of subsection (c) filed 5-31-2016; operative 7-1-2016 (Register 2016, No. 23). Note: Authority cited: Section 790.10, Insurance Code. Reference: Sections 780, 790.02 and 790.03, Insurance Code.
1. Amendment filed 4-2-85; effective thirtieth day thereafter (Register 85, No. 14).
2. Change without regulatory effect amending subsection (b) and Note filed 1-8-2015 pursuant to section 100, title 1, California Code of Regulations (Register 2015, No. 2).
3. Amendment of subsections (b)(2)-(3) and repealer of subsection (c) filed 5-31-2016; operative 7/1/2016 (Register 2016, No. 23).