California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 9 - Insurance Fraud › Article 2 - Special Investigative Unit › Section 2698.40 - SIU Annual Report

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				  Each insurer shall file a report as prescribed herein, at the time its initial
				  Certificate of Authority is issued, and annually thereafter. After the filing
				  of the report at the time of the initial issuance of its Certificate of
				  Authority, an insurer may satisfy the requirement stated in the preceding
				  sentence by ensuring that each year the information required to be reported
				  pursuant to this Section
				  2698.40 with respect to the
				  performance of the insurer's SIU functions is reported truthfully, accurately,
				  and completely by another insurer in the insurer's holding company group
				  (hereinafter a "primary reporting insurer"), which conducts the insurer's SIU
				  operations on behalf of the insurer. The annual report shall be due no later
				  than ninety (90) days after the date of mailing of the notification by the
				  Department. The Department shall issue the notification in June of each
				  year.
(b) A complete, accurate, and
				  truthful annual report shall be submitted on a form as prescribed by the
				  Department and shall include the following information.
(1) The insurer's California Certificate of
				  Authority Number, the lines of insurance the insurer is currently writing in
				  California, the insurer's contact information and, in the case of a primary
				  reporting insurer, the names and California Certificate of Authority Numbers of
				  the insurers serviced by the primary reporting insurer's SIU.
(2) The name(s), title(s), and contact
				  information of the insurer's SIU personnel working on California fraud
				  investigations; or the name of the organization and organizational contacts
				  with whom the insurer has contracted for the maintenance of the SIU that
				  investigates suspected insurance fraud occurring in California, or for any
				  function of that SIU.
(3) The names
				  of personnel whose duties include communication with the Fraud Division on
				  matters related to the reporting, investigation, and prosecution of suspected
				  fraudulent claims or other suspected insurance fraud.
(4) A description of the insurer's methods
				  and copies of written procedures used by the insurer or its contracted entities
				  for detecting, investigating, and reporting suspected insurance fraud. The
				  material that is required to be included pursuant to this subdivision (b)(4)
				  shall include at least the following:
(A) A
				  description of any written procedures or other methodologies used to identify
				  claims, applications, or other transactions as following patterns or trends
				  that may indicate possible insurance fraud;
(B) A description, by line of business, of
				  insurance fraud patterns or trends and the procedures put in place to deter,
				  and detect instances of, the identified patterns or trends; and
(C) A description of the insurer's processes
				  and activities to ensure that all integral anti-fraud personnel are identifying
				  instances of suspected insurance fraud and referring those instances to the
				  SIU.
(5) A description
				  of, and copies of, the insurer's plan, and the plans of any contracted
				  entities, for initial and ongoing fraud education and training for integral
				  anti-fraud personnel pursuant to this article, including identification of the
				  topics covered, a description of the process used in order to ensure the
				  training is received, and proof that the training occurred.
(6) A written description or chart outlining
				  the organizational arrangement of the insurer's SIU and integral anti-fraud
				  personnel, including personnel of any contracted entities, who are responsible
				  for the detection, investigation, and reporting of suspected insurance fraud
				  that occurred in California.
(7) A
				  description of how the SIU is adequately staffed to meet the requirements
				  herein and the expertise of the staff. The description shall include:
(A) The total number of SIU staff employed by
				  the insurer to investigate suspected insurance fraud occurring in
				  California;
(B) An indication of
				  whether (1) all of the staff members included in the number reported pursuant
				  to subdivision (b)(7)(A) of this Section
				  2698.39 investigate only suspected
				  insurance fraud occurring in California, or (2) some or all of those staff
				  members also investigate suspected insurance fraud investigate suspected
				  insurance fraud occurring in other states;
(C) Total hours of insurer employee time
				  spent working on fraud investigations of suspected insurance fraud that
				  occurred in California;
(D) In the
				  event it is impracticable to report the total hours of insurer employee time
				  spent working on fraud investigations of suspected insurance fraud that
				  occurred in California pursuant to subdivision (b)(7)(C) of this section, the
				  product resulting from the mathematical operation described in subdivision
				  (b)(7)(D)3. of this section may instead be reported, together with a notation
				  to the effect that the alternate method described, below, in this subdivision
				  (b)(7)(D) was used in lieu of reporting the hours count called for in
				  subdivision (b)(7)(C):
1. Divide the number of
				  California claims or other transactions resulting in the SIU's opening an
				  investigation, reported pursuant to subdivision (b)(8)(C) of this section, by
				  the number of investigations opened nationwide by the insurer's SIU during the
				  last calendar year;
2. Multiply the
				  number of SIU staff employed by the insurer nationwide to investigate suspected
				  insurance fraud by the quotient resulting from the operation described in
				  subdivision (b)(7)(D)1. of this section;
3. Multiply the product resulting from the
				  operation described in subdivision (b)(7)(D)2. of this section by 2080
				  hours.
(E) Total hours of
				  contracted SIU personnel time spent working on fraud investigations related to
				  the insurer's claims and, if applicable, other transactions, occurring in
				  California; and
(F) A description
				  of how the insurer measures the effectiveness of its SIU.
(8) For each reported company:
(A) The number of California claims processed
				  by the insurer during the last calendar year;
(B) The number of claims or other
				  transactions referred to the SIU during the last calendar year that involved
				  suspected insurance fraud occurring in California; and
(C) The number of those referred claims or
				  other transactions reported pursuant to subdivision (b)(8)(B), above, that
				  resulted in the SIU's opening an investigation.
(9) For each reported company, the number of
				  incidents of suspected insurance fraud reported to the Department and to
				  district attorney offices in California, during the last calendar
				  year.
(10) A description of any
				  significant changes, and any significant anticipated changes, to the insurer's
				  structure and operations that have impacted or will impact the insurer's SIU
				  operation, as well as a description of the impact of any such significant
				  changes or significant anticipated changes on the insurer's SIU
				  operation.
(11) A listing of all
				  lines of insurance the insurer issues in California, the number of active
				  policies for each line of insurance, and a description of each product or
				  program offered for each line of insurance.
(12) Insurers who enter into contracts for
				  the purpose of compliance with these regulations shall for each such contract
				  provide a complete copy of the fully executed, existing contract, including all
				  attachments and addenda, to the Department and shall specify the manner in
				  which the contract is monitored. The material included pursuant to this
				  subdivision (b)(12) shall include a listing of all entities so contracted with,
				  a description of the services provided by each such entity, and a description
				  of each entity's SIU.
(13) The
				  number and type of civil actions initiated in California by each reported
				  company alleging acts of insurance fraud during the preceding calendar year,
				  the case name of each such action, the county in which it was filed, the court
				  name and case number, and the Department of Insurance case number indicated on
				  the letter sent to the insurer from the Fraud Division acknowledging receipt of
				  the fraud referral.