The Fraud Division of the California Department of Insurance (CDI) operates specialized programs to combat different types of insurance fraud. Each program is designed to investigate, prevent, and support the prosecution of fraudulent schemes that increase costs for consumers and threaten the solvency of insurers.
Below are the key program areas:
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Workers’ Compensation Fraud
- Covers both claimant fraud (employees faking or exaggerating injuries), employer fraud (underreporting payroll to reduce premiums), and provider fraud (medical providers billing for unnecessary or nonexistent treatments).
- Examples: A worker files a claim for a workplace injury that actually occurred while playing sports; an employer misclassifies employees to lower premiums.
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Automobile Insurance Fraud
- Includes staged collisions, false injury claims, inflated repair bills, and vehicle “give-ups” (intentionally abandoning or destroying a car and reporting it as stolen).
- This type of fraud is widespread and contributes significantly to rising auto insurance premiums in California.
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Healthcare Fraud
- Involves fraudulent billing by medical professionals, prescription fraud, and false claims for medical services not rendered.
- Examples: A clinic billing for unnecessary tests, or individuals staging fake medical treatments to collect benefits.
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Property and Casualty Fraud
- Encompasses fraud related to homeowners’, renters’, and commercial property policies.
- Examples: Filing inflated theft claims, committing arson for profit, or fabricating damage following a natural disaster.
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Premium Fraud
- Occurs when an employer or individual intentionally misrepresents facts to obtain lower insurance premiums.
- Examples: Misclassifying workers in less hazardous job categories or underreporting payroll to reduce workers’ comp costs.
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Life and Disability Fraud
- Includes false applications, staged deaths, or misrepresentations to obtain benefits under life or disability policies.
- Examples: Providing false medical history on an application, or submitting disability claims for conditions that do not prevent employment.
Each of these fraud programs is funded through assessments on insurers and is designed to support investigations, provide training, and coordinate with prosecutors across California. The CDI Fraud Division ensures that resources are directed toward the most damaging fraud types, protecting both consumers (from higher premiums) and insurers (from financial losses).
