Proposed Bill Would Permit California Department of Insurance to Order Restitution to Victims of Unlicensed Insurance Sellers


By Allison Plette

SB 1040 (Rubio), as introduced February 15, 2022, would amend sections 12928.6 and 12976 of, and add section 12928.7 to, the Insurance Code to authorize the Insurance Commissioner to order restitution to consumers for illegal actions by unlicensed sellers of insurance. Under current law, the Commissioner can order unlicensed sellers of insurance to cease and desist and pay a fine, but the Commissioner cannot order unlicensed sellers to pay restitution to consumers for their losses. The amendments to sections 12928.6 and 12976 would add the term ‘restitution’ to the list of available penalties the Commissioner can impose for certain violations. New section 12928.7 would require the rescission or restitution order to be subject to judicial review and would authorize the Commissioner to issue an order of rescission enforceable on any person subject to the commissioner’s jurisdiction.

The proposed law is sponsored by California Insurance Commissioner Ricardo Lara as part of an initiative to help consumers victimized by insurance scams, including illegal robo-calls purporting to sell extended automobile warranties. According to the Federal Communications Commission, automobile warranty robo-calls were the top unwanted call complaint in 2020, with the trend continuing into 2021.

In a February 15, 2022 press release, Commissioner Lara stated that the changes proposed by SB 1040 would give the Department of Insurance “the ability to order restitution to seniors, consumers, and small businesses who fall prey to unlicensed sellers of insurance, especially during th[e] pandemic.”

The bill has been double referred to the Senate Insurance and Judiciary committees.  At this writing, a hearing has not yet been set. If you think you have received a call involving fraud, you can file a complaint with the Federal Trade Commission at


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