Cal. Insurance Code § 10200.2

An insurer may, in the discretion of the contracting parties, enter into a contract with a group policyholder or other contracting entity under any group, selected group, or franchise policy issued by the insurer to determine the amount the insurer may retain from premiums paid or to provide for the establishment of reserves or deposits to meet future contingencies of any nature under such insurance policy. Under this section, “contracting entity” means any of the following: (a) The employer, association, trustee, union, or other entity to whom a group policy is issued. (b) The organization to which an individual policyholder must belong or be associated with to be insured under a franchise or a selected group policy. (c) Any entity formed and operating for purposes other than the procuring of insurance to which two or more contracting entities defined in subdivision (a) or (b) of this section belong.