The primary responsibility of the Special Investigative Unit (SIU) Compliance Review Program is to inspect insurance companies and evaluate regulatory compliance regarding the establishment, staffing, training, and operation of the insurer's SIU. In addition, the SIU Compliance Review Program is responsible for issuing, tracking, and analyzing the SIU annual compliance reports filed by over 1,100 insurance companies each year.
The majority of California licensed insurers are required by California Insurance Code Sections 1875.20-24 and California Code of Regulations, Title 10, Sections 2698.30-.43 to establish and maintain Special Investigative Units that identify and refer suspected insurance fraud to CDI (and the county district attorney's office for workers' compensation only). The regulations also require each insurance company to submit a SIU annual compliance report to CDI which provides important information regarding the insurer's anti-fraud operations, policies and procedures, and anti-fraud training. The SIU Compliance Review Program analyzes and evaluates the content, accuracy, completeness, and timeliness of the report. Various criteria provided by the reports are used to conduct a risk assessment which determines which insurers should be selected for SIU compliance review. Risk criteria includes, but is not limited to:
- Prior SIU compliance review finding(s), as well as follow up on recommended corrective action(s);
- Discrepancies and/or non-compliance issues identified by analyzing the SIU Annual Report;
- Quantity and/or quality of suspected insurance fraud referrals to CDI (eFD-1, FD-1, or SFC forms), and district attorney's offices for workers' compensation only;
- Line of insurance that are relatively risky and susceptible to fraud;
- Nature and/or quantity of complaints received for a particular insurance company;
- Market share of the insurance carrier;
- Late or no response to information demand letters from CDI or other authorized governmental agencies (e.g., district attorneys), and/or CDI executive directive.
During Fiscal Year 2011-12, the SIU Compliance Review Program conducted 10 on-site audits of primary insurance companies, which included 17 subsidiary companies for a total of 27 insurance companies; of the 27 companies, 10 were authorized to write workers' compensation insurance in California. Out of the 10 primary companies reviewed, six were located out-of-state and four were in California. In addition, five audits begun in prior fiscal years were completed.
For questions regarding California SIU compliance requirements, please contact:
SIU Compliance Review Program
California Department of Insurance, Fraud Division
9342 Tech Center Drive, Suite 100
Sacramento, CA 95826
Phone: (916) 854-5760