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CA Department of Insurance

Fraud Division's History

CDI Fraud Staff

Today's Fraud Division has it roots in the California State Bureau of Fraudulent Claims which was established in 1979.  When the Bureau first opened its doors in May of that year, it had three offices (Sacramento, San Francisco, and Los Angeles) and was staffed with only a chief and five investigators.  In 1980, Bureau of Fraudulent Claims Investigators became sworn Peace Officers under Section 830.3 of the California Penal Code.  In 1988, the Bureau grew within the Department of Insurance and was reclassified as the Fraud Division.

Unlike most California state agencies whose budgets are derived from the general fund, the Fraud Division's funding is primarily secured from assessments on insurance policies issued in the State.  For example, in January 1988, the Automobile Insurance Claim Act was enacted to procure a $1 assessment from every auto insurance policy issued to fund Auto Insurance Fraud investigations.  In 1991, state Senate Bill 1218 assigned the Fraud Division with the task of conducting criminal investigations involving Workers' Compensation Insurance Fraud.

In 1991 we also saw the swearing in of John Garamendi as the first elected official to hold the position of Insurance Commissioner.

October of 1999 saw the passage of Assembly Bill 1050 which created the Organized Automobile Fraud Activity Interdiction Program.  The primary focus of the program is directed at the organized criminal activity that occurs in urban areas and which often involves the staging of automobile accidents and the filing of fraudulent automobile accident or damage claims which have resulted in deaths, injuries, and higher premiums passed along to law-abiding auto insurance policyholders.  Traditionally, these criminal organizations are masterminded by legal and medical professionals whose operations can be quite sophisticated.  Despite this though, the Fraud Division has arrested 1,414 individuals involving approximately $52,000,000 since the inception of this successful program.

Fiscal year 2004-05 saw the creation of the Healthcare and Disability Insurance Fraud Program which focuses on the suspected billions of dollars lost due to health care fraudulent activity.  In fiscal year 2007-08, Fraud Division Detectives made 17 arrests involving over $11 million in potential losses.

Today, the Fraud Division celebrates over 30 years as being the premiere insurance fraud investigative agency in the nation with close to 200 sworn officers operating in nine regional offices throughout the State of California.

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