Written consent, licensing, and appointments

In California, strict licensing rules control who may transact insurance. The goal is consumer protection and a trustworthy insurance marketplace. Under California Insurance Code §1631, no one may act as an insurance agent, broker, or producer unless they’re properly licensed.

In this context, transacting insurance includes activities such as:

• Soliciting applications
• Negotiating coverage
• Collecting premiums
• Delivering policies

The law also sets clear penalties for unauthorized activity. Under CIC §1633, an unlicensed person who attempts to transact insurance may face significant fines, denial of future licensing, or other disciplinary actions. These penalties help prevent fraud, protect consumers from unqualified individuals, and ensure that insurance transactions are handled by trained, regulated professionals.

Licensing is only part of the requirement. Every insurance producer must also be appointed by the insurer(s) they represent. An appointment is the insurer’s formal authorization for a producer to act on the insurer’s behalf. Without both a license and an appointment, a producer can’t legally sell or service insurance products in California.

Federal regulations (18 USC §§1033-1034)

Federal law adds another layer of restrictions on who may participate in the insurance industry. Under 18 U.S.C. §§1033-1034, it’s a federal crime for a person convicted of a felony involving dishonesty, breach of trust, or financial crimes to engage in the business of insurance unless they first obtain written consent from the appropriate regulatory authority (typically the state insurance commissioner).

The purpose of this law is to protect consumers and the financial system. Insurance transactions often involve money handling and fiduciary responsibility, so the law limits participation by individuals whose criminal history suggests a higher risk of fraud or financial misconduct.

Violations carry serious consequences. A person who engages in the insurance business without the required consent may face civil fines, permanent industry bans, and criminal penalties, including imprisonment. An insurer or individual who willfully permits that participation may also be subject to penalties.