(a) If there is good cause to believe that the surplus line advisory organization’s noncompliance with any provision of this chapter is willful, or if within the period prescribed by the commissioner in the notice required by subdivision (a) of Section 1780.59 the advisory organization does not make the changes necessary to correct the noncompliance specified by the commissioner or establish to the satisfaction of the commissioner that noncompliance does not exist, then the commissioner may hold a hearing in connection therewith, provided that within a reasonable period of time, which shall not be less than 30 days before the date of the hearing, the commissioner shall mail written notice specifying the matters to be considered at the hearing to the advisory organization. The notice shall conform to the requirements for an accusation as prescribed by Section 11503 of the Government Code. If no notice has been given as provided in subdivision (a) of Section 1780.59, notice shall be given as to the manner and extent of noncompliance that is alleged to exist. The hearing shall not include any subjects not specified in the notices required by subdivision (a) of Section 1780.59 or this section, except that if the hearing relates to or is based upon any aspect of the commissioner’s examination report on the advisory organization, the hearing shall also include any other aspect of the report that the advisory organization designates for consideration.
(b) In the event the commissioner reasonably determines that the advisory organization is engaged in fraudulent activity or malfeasance in the performance of the duties delegated by the commissioner under this chapter or in the exercise of the authority incidental thereto or otherwise is in violation of or noncompliance with any provision of this chapter, and that conduct has resulted, or is likely to result, in a significant, adverse, and immediate effect on the public or the commissioner’s ability to regulate the surplus line business that, because of the emergency nature of the effect on the public or the commissioner’s ability to regulate the surplus line business, cannot reasonably be remedied under the other provisions of this chapter, the commissioner may issue an order, without prior hearing, directing the advisory organization to cease and desist from the conduct or suspending or revoking all or part of the advisory organization’s authorization to perform the duties delegated by the commissioner under this chapter, in addition to imposing any other penalty provided for in this code. An order under this subdivision may, if necessary, also direct the advisory organization to preserve documents and records and to grant immediate access by the commissioner’s authorized representatives to the advisory organization’s premises to examine and make copies of any and all unprivileged documents and records of the advisory organization maintained on behalf of the commissioner pursuant to this chapter. Within five days after issuing an order under this subdivision, the commissioner shall issue the notice and shall thereafter hold the hearing under subdivision (a) of this section, provided, however, that:
(1) The notice shall include a statement of the factual bases for issuance of the order under this subdivision.
(2) The notice shall be delivered to the advisory organization’s offices within one day of issuance.
(3) The advisory organization shall be granted a hearing upon 10 days’ written request to the commissioner or upon the hearing date set by the commissioner, whichever is earlier.
(4) Within 10 days following the hearing under this subdivision, the commissioner shall confirm, modify, or withdraw the summary order issued prior to hearing under this subdivision.
(Added by Stats. 1993, Ch. 1007, Sec. 1. Effective January 1, 1994.)