Cal. Code Regs. tit. 10 § 2604.04
NOTE: The presence in these regulations of this and the following section in this article does not mean that a negotiating permit is a necessary precedent to a definitive permit. A definitive permit may always and quite often does authorize negotiations. Where applicant is confident its "negotiations" will succeed, it customarily skips the negotiating permit stage and applies directly for a definitive permit. These sections represent the present practice and, in accordance with the Code, only provide for an intermediate step where applicant is not ready to proceed on the ultimate definitive permit basis.
Except as may otherwise be provided by law or these regulations, under the appropriate circumstances applications for negotiating permits may properly be filed by authorized insurers, admitted or nonadmitted. If an application seeks authorization to solicit or "negotiate" for acceptance of a proposal whose terms, conditions, value and consideration are already fixed and no substantial part of which is to be arrived at through bargaining, then such application must make the showing needed upon which to base findings required by Insurance Code Section 839 and, if the Commissioner requires, authorized by Section 839.1 ibid. Otherwise, if the application shows that the terms and conditions of the proposal sought to be negotiated, or the value or consideration to be paid are still to be agreed upon through genuine bargaining, then such application need not show the basis for findings under said Sections 839 and 839.1. In the latter event a permit issued in response to such an application will make no findings under said sections and will authorize negotiations only.
Cal. Code Regs. Tit. 10, § 2604.04