Section 2698.40 - SIU Annual Report(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.(c) A statement signed under penalty of perjury pursuant to the laws of the state of California must accompany all reports mentioned herein. This statement must be signed by an officer of the holder of or applicant for the Certificate of Authority who attests to the accuracy of the reported information and the signor's personal knowledge of the existence and proper maintenance of an SIU described in this report and these regulations.(d) The insurer is to maintain a copy of the annual report that will be available for review during examinations as conducted pursuant to section 2698.41 of these regulations or as otherwise requested by the Department.(e) For the purpose of these regulations, the name(s) of the insurer's personnel who will communicate with the Fraud Division shall not be made part of the public record and shall be released only pursuant to the provisions of Insurance Code section 1873.1 applicable to information acquired pursuant to Article 3 of the Insurance Frauds Prevention Act.Cal. Code Regs. Tit. 10, § 2698.40
1. New article and section filed 5-3-94; operative 6-2-94 (Register 94, No. 18).
2. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section filed 9-4-2003 as an emergency; operative 9-4-2003 (Register 2003, No. 36). A Certificate of Compliance must be transmitted to OAL by 1-2-2004 or emergency language will be repealed by operation of law on the following day.
3. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 1-2-2004 as an emergency; operative 1-3-2004. (Register 2004, No. 1). A Certificate of Compliance must be transmitted to OAL by 5-3-2004 or emergency language will be repealed by operation of law on the following day.
4. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 5-4-2004 as an emergency; operative 5-4-2004 (Register 2004, No. 19). A Certificate of Compliance must be transmitted to OAL by 9-1-2004 or emergency language will be repealed by operation of law on the following day.
5. Editorial correction of HISTORY 4 (Register 2004, No. 36).
6. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 9-1-2004 as an emergency; operative 9-1-2004 (Register 2004, No. 36). A Certificate of Compliance must be transmitted to OAL by 12-30-2004 or emergency language will be repealed by operation of law on the following day.
7. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 12-28-2004 as an emergency; operative 12-30-2004 (Register 2004, No. 53). A Certificate of Compliance must be transmitted to OAL by 4-29-2005 or emergency language will be repealed by operation of law on the following day.
8. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 4-29-2005 as an emergency; operative 4-29-2005 (Register 2005, No. 17). A Certificate of Compliance must be transmitted to OAL by 8-29-2005 or emergency language will be repealed by operation of law on the following day.
9. Certificate of Compliance as 4-29-2005 order, including repealer and new section, transmitted to OAL 8-26-2005 and filed 10-7-2005 (Register 2005, No. 40).
10. Amendment filed 7-30-2020; operative 10-1-2020 (Register 2020, No. 31). Note: Authority cited: Sections 1875.24, 1879.5 and 1879.6, Insurance Code; Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d. 805, 824, 258 Cal. Rptr. 161, 771 P.2d 1247; Credit Ins. Gen. Agents Assn. v. Payne (1976) 16 Cal.3d 651, 656, 128 Cal. Rptr. 881, 547 P.2d 993; and Garris v. Carpenter (1939) 33 Cal. App. 2d. 649, 653, 92 P.2d 688. Reference: Sections 1875.20, 1875.21, 1875.24, 1879.5, 12921(a) and 12926, Insurance Code.
1. New article and section filed 5-3-94; operative 6-2-94 (Register 94, No. 18).
2. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section filed 9-4-2003 as an emergency; operative 9-4-2003 (Register 2003, No. 36). A Certificate of Compliance must be transmitted to OAL by 1-2-2004 or emergency language will be repealed by operation of law on the following day.
3. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 1-2-2004 as an emergency; operative 1-3-2004. (Register 2004, No. 1). A Certificate of Compliance must be transmitted to OAL by 5-3-2004 or emergency language will be repealed by operation of law on the following day.
4. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 5-4-2004 as an emergency; operative 5-4-2004 (Register 2004, No. 19). A Certificate of Compliance must be transmitted to OAL by 9-1-2004 or emergency language will be repealed by operation of law on the following day.
5. Editorial correction of History4 (Register 2004, No. 36).
6. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 9-1-2004 as an emergency; operative 9-1-2004 (Register 2004, No. 36). A Certificate of Compliance must be transmitted to OAL by 12-30-2004 or emergency language will be repealed by operation of law on the following day.
7. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 12-28-2004 as an emergency; operative 12-30-2004 (Register 2004, No. 53). A Certificate of Compliance must be transmitted to OAL by 4-29-2005 or emergency language will be repealed by operation of law on the following day.
8. Repealer of article 2 (sections 2698.40-2698.45) and repealer and new section refiled 4-29-2005 as an emergency; operative 4-29-2005 (Register 2005, No. 17). A Certificate of Compliance must be transmitted to OAL by 8-29-2005 or emergency language will be repealed by operation of law on the following day.
9. Certificate of Compliance as 4-29-2005 order, including repealer and new section, transmitted to OAL 8-26-2005 and filed 10-7-2005 (Register 2005, No. 40).
10. Amendment filed 7-30-2020; operative 10/1/2020 (Register 2020, No. 31).