Claims News Service, Apr. 26, 4:59 p.m. EDT — The California Assembly passed a bill this week that will increase the ability of its Department of Insurance to fight insurance fraud.

The bill, AB 1401, which was brought by Assemblyman Greg Aghazarian, substantially increases the mandatory assessment amounts for insurers who write policies in the state, from $1,300 to $5,100. According to a release from the California Department of Insurance (CDOI), who sponsored the bill, the 300 percent increase is due to the fact that assessment rates have not been raised since 1973, except for a small increase of $300 in 2000. The additional money obtained from the required assessments will go towards hiring 22 vacant investigator positions that previously were unfilled because of budget constraints, the CDOI said.

In addition to the increased assessments, the bill also will require the CDOI to annually post on its web site the performance outcomes of its fraud investigative program.

Insurance Commissioner Steve Poizner, who took over California insurance commissioner duties from John Garamendi in January, has made insurance fraud a focal point of his department. With the bill's approval, Poizner fulfilled a portion of his inaugural address, in which he said, “I'll fight to lower insurance rates by aggressively attacking insurance fraud. I'll enhance the capacity of the fraud units in my department to find and shut down insurance scam operations. And I will work with District Attorneys around the state to make the fraud unit so effective, and so renowned, that in California, criminals will be looking for honest work … or they will be looking through the bars of a prison cell.”

A recent study from the Coalition Against Insurance Fraud shows that the state has reason to focus on the problem. California convicted more than three times the amount of swindlers (1,546) as the next closest state, Florida (493), demonstrating the prevalent and viral nature of the crime. Last year, the National Insurance Crime Bureau even ranked Los Angeles as having the second-highest rate of staged auto accidents in the nation.

Interested in more fraud news and in-depth articles? Head over to Claims' fraud channel for more information.

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