1. (a) Every workers' compensation policy issued on a participating basis shall include a participating provision or endorsement indicating that it is a participating policy. All workers' compensation policy forms, including any participating provisions or endorsements, shall be filed with the Commissioner prior to use.

2. (b) If a policy is issued on a participating basis, the participating provision or endorsement shall be designated “Participating Provision” and contain the following language:

   “Under California Law it is unlawful for an insurer [us] to promise the future payment of dividends under an unexpired workers' compensation policy or to misrepresent the conditions for dividend payment. Dividends are payable only pursuant to conditions determined by the [our] Board of Directors or other governing board [of the Company] following policy expiration. 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 issued by the same insurer is illegal and constitutes an unfair practice.”

3. (c) A workers' compensation insurer may advise a prospective policyholder, directly or through its agent or an insurance broker or solicitor, of the provisions and factors, or the arrangement thereof, that shall be set forth in the participating provision, provided that such advice or provisions and factors shall not set forth or imply, directly or indirectly, the amount of dividend or percentage of premium which will be paid as dividend, or amount or percentage of premium to be retained by the insurer after payment of dividend.
4. (d) A participatory provision shall set forth any time schedule during which the insurer intends to consider, compute or pay any dividend, if applicable.

Note: Authority cited: Sections 790.10, 10191 and 11659, Insurance Code. Reference: Sections 780, 781, 790, 790.01, 790.02, 790.03, 10191, 11657, 11658 and 11659, Insurance Code.

History

1. Amendment filed 12-30-83; operative 1-1-84 pursuant to Government Code section 11346.2(d) (Register 84, No. 1).

2. Editorial correction implementing 12-30-83 amendments and adding History 1 (Register 98, No. 40).

3. Change without regulatory effect amending section and Note filed 1-8-2015 pursuant to section 100, title 1, California Code of Regulations (Register 2015, No. 2).

4. Amendment of section heading, repealer of first paragraph, amendment of subsections (a)-(b) and new subsections (c)-(d) filed 5-31-2016; operative 7-1-2016 (Register 2016, No. 23).