Article 5 - Arson Investigations

California Insurance Code — §§ 1875-1875.8

Sections (22)

Amended by Stats. 1991, Ch. 602, Sec. 2.

As used in this chapter:

(a)“Authorized agency” means any of the following officers or agencies, or their duly authorized representatives, when investigating or prosecuting arson in connection with a specific fire: the State Fire Marshal, the Director of the Department of Forestry and Fire Protection, the chief of any city or county fire department, the chief of any fire protection district, the Attorney General, any district attorney, or any peace officer, the Department of Insurance, and any federal agency.

(b)“Insurer” means any insurer admitted to write, or otherwise issuing, fire insurance covering property in this state and includes its agents, servants, investigators, and adjusters. “Insurer” includes the California FAIR Plan.

§ 1875.1

Added by Stats. 1989, Ch. 1119, Sec. 3.

An authorized agency may, when there is evidence or suspicion that the crime of arson has been committed, request any insurer to release all information in its possession that the authorized agency determines to be relevant to the crime. The insurer shall release the following:

(a)Any insurance policy or any application for such a policy.

(b)Policy premium payment records.

(c)History of previous claims made by the insured for fire loss.

(d)Material relating to the investigation of the loss, including the statement of any person, proof of loss, and any other relevant evidence.

§ 1875.2

Added by Stats. 1989, Ch. 1119, Sec. 3.

If any insurer has reason to suspect that a fire loss was caused by incendiary means, the insurer shall furnish an authorized agency with all relevant information acquired during its investigation of the fire loss and cooperate in an investigation by an authorized agency.

The authorized agency provided with the information pursuant to this article may release that information to any of the other authorized agencies.

§ 1875.3

Amended by Stats. 1991, Ch. 602, Sec. 3.

An authorized agency shall notify the insurer, if known, and at the expense of the insurer, whenever it has reason to believe that a fire loss was not accidentally caused. The agency shall also release to the claimant’s insurer specific information regarding the fire loss at the earliest time possible unless it determines that an ongoing investigation would be jeopardized.

§ 1875.4

Added by Stats. 1989, Ch. 1119, Sec. 3.

In the absence of fraud or malice, no insurer or person acting in its behalf who (a) furnishes information whether oral or written, pursuant to this article, or (b) assists in any investigation conducted by an authorized agency, shall be liable for damages in a civil action, nor shall any authorized agency which releases information pursuant to this chapter be liable for damages in a civil action.

The act of furnishing information required pursuant to this article shall not constitute an act of fraud or malice.

§ 1875.5

Added by Stats. 1989, Ch. 1119, Sec. 3.

In any case in which an insurer willfully fails to comply with this article, the authorized agency may petition the superior court in an appropriate county for an order requiring compliance.

§ 1875.6

Amended by Stats. 1991, Ch. 602, Sec. 4.

Any authorized agency that receives any information furnished as required by this article shall not make the information public until the time that its release is required in connection with a criminal or civil proceeding.

§ 1875.8

Added by Stats. 1994, Ch. 420, Sec. 1. Effective January 1, 1995.

(a)There is hereby created the Arson Information Reporting System to permit insurers, law enforcement agencies, fire investigative agencies, and district attorneys to deposit arson case information in a common data base within the Department of Justice. The State Fire Marshal shall oversee the establishment, operation, and maintenance of the Arson Information Reporting System. The Department of Justice shall implement the Arson Information Reporting System in consultation with the State Fire Marshal.

(b)The purpose of the data base is to identify utilization patterns by individual claimants and the methods of operation of individuals, groups, or businesses engaged in the commission of arson, and to prevent the commission of insurance fraud by arson.

(c)The use of the information deposited pursuant to this article shall be made available to law enforcement agencies, fire investigative agencies, district attorneys, and insurers, via modem, for the purpose of investigating and prosecuting arson and arson-related insurance fraud, or evaluating the validity and payment of fire-related insurance claims. The State Fire Marshal shall establish rules governing the access to, and use of, information and the circumstances under which information may be accessed and corrected.

(d)Any information acquired pursuant to this section shall not be a part of any public record. Except as otherwise provided by law, any authorized governmental agency, an insurer, or an agent authorized by an insurer to act on its behalf, which receives any information furnished pursuant to this section, shall not release that information to public inspection until the time that its release is required in connection with a criminal or civil proceeding.

(e)Information submitted to the State Fire Marshal pursuant to this section concerning active cases shall be confidential.

(f)Nothing in this section shall prohibit the accumulation and public distribution by the bureau of statistical data if that data does not reveal the identity of specific claimants, injured parties, attorneys, physicians, or other service providers.

§ 1875.10

Amended by Stats. 1994, Ch. 1247, Sec. 4. Effective January 1, 1995.

The Legislature finds and declares as follows:

(a)That the business of insurance involves many transactions which have potential for abuse and illegal activities.

(b)That insurers and their policyholders ultimately pay the cost of fraudulent insurance claims.

(c)That the operation of insurance claims analysis bureaus would be to the benefit of the public, regulators, law enforcement, prosecutors, and insurers in suppressing and preventing insurance claims fraud.

(d)That the purpose of insurance claims analysis bureaus is to provide a data service to encourage the identification of utilization patterns by individuals or businesses who provide services in support of insurance claims, and by individual claimants themselves, in order to facilitate the identification and prevention of fraudulent activities.

(e)That promotion of an effective public-private partnership between the insurance industry and the commissioner to share data on suspected fraudulent claims is necessary to avoid unnecessary duplication and expense in reporting that data.

(f)It is the intent of the Legislature that, to promote a data-sharing partnership that is efficient and cost-effective, the commissioner and the bureau make every effort to obtain suspected fraudulent claims data from reporting and collection sources already in existence and supported by the insurance industry, by licensing those sources as claims analysis bureaus, as provided in this chapter.

§ 1875.11

Added by Stats. 1991, Ch. 1222, Sec. 3.

(a)No insurance claims analysis bureau shall conduct any operations in this state without first filing a written application with the commissioner and obtaining a license to act in that capacity.

(b)As used in this section, an insurance claims analysis bureau is an organization, duly licensed pursuant to this article, which collects claims information and data from and disseminates claims information and data to its members or subscribers which is utilized for the purpose of the prevention and suppression of insurance fraud.

§ 1875.12

Amended by Stats. 1997, Ch. 501, Sec. 2.8. Effective January 1, 1998.

(a)The commissioner may license an organization as an insurance claims analysis bureau if it meets the following qualifications:

(1)Is a nonprofit corporation organized for the purpose of fraud prevention or is a corporation that has made the filings required by Section 1855.2.

(2)Has at least two years of experience, or has a managing officer with at least two years of experience, determined by the commissioner to be relevant to operation of an insurance claims analysis bureau, or has at least two years’ experience collecting and compiling insurance statistical information.

(3)Has a member or subscriber base of sufficient size that is, in the opinion of the commissioner, adequate to assure uniformity in data collection and cost efficiency to the insurer.

(4)Maintains its records in a computerized format.

(b)An applicant seeking a license as an insurance claims analysis bureau shall file with the commissioner the following documents:

(1)A copy of its articles of incorporation, its bylaws, and any rules and regulations governing the conduct of its business.

(2)A list of members or subscribers.

(3)A description of its technical capacity to collect and serve the volume of data necessary to act as an insurance claims analysis bureau.

(4)A statement establishing that the applicant meets the conditions set forth in subdivision (a).

(5)A certificate signed by an officer of the applicant that it will permit any licensed insurer to become a member or subscriber to the insurance claims analysis bureau.

(6)A statement of all of the following:

(A)That it will provide admitted insurers subject to Article 6 (commencing with Section 1876) the ability to submit required information to the claims analysis bureau at no cost to the insurer, and also provide nonmember or nonsubscriber insurers, at no cost to the insurer, any software that is specifically designed for the purpose of submitting information electronically that the bureau requires its insurers to use.

(B)That information from its data base will be made available to state law enforcement agencies pursuant to existing law, and that it will be made available at no cost to those agencies.

(c)This section shall not be interpreted to provide any nonmember or nonsubscriber any rights of membership or subscription in an organization licensed as an insurance claims analysis bureau.

§ 1875.13

Added by Stats. 1991, Ch. 1222, Sec. 3.

The commissioner shall license an insurance claims analysis bureau by class of claims, if an insurance claims analysis bureau makes application and is appropriately qualified, for the following classes of claims:

(a)Automobile bodily injury, which shall include liability, uninsured motorist, and medical payment.

(b)Automobile physical damage.

(c)Automobile theft.

(d)Fire and allied lines property damage.

(e)General liability bodily injury.

(f)Disability.

(g)Life.

(h)Workers’ compensation.

§ 1875.14

Added by Stats. 1991, Ch. 1222, Sec. 3.

An insurance claims analysis bureau shall perform the following functions:

(a)Collect and compile information and data from members or subscribers concerning insurance claims.

(b)Disseminate information to members or subscribers relating to insurance claims for the purpose of preventing and suppressing insurance fraud.

(c)Promote training and education to further insurer investigation, suppression, and prosecution of insurance fraud.

(d)Provide, without fee or charge, to the commissioner, all California data and information contained in the records of the insurance claims analysis bureau in furtherance of the prevention and prosecution of insurance fraud.

§ 1875.15

Amended by Stats. 1994, Ch. 1248, Sec. 2. Effective January 1, 1995.

(a)A licensed insurance claims analysis bureau shall develop rules governing the kind, quality, and frequency of data reporting, which shall be binding on all subscribers or members. The commissioner may require development of new claims categories for the suppression and prevention of fraud.

(b)Every member or subscriber shall report, at a minimum, the following regarding any category of claims:

(1)Name of claimant.

(2)Address of claimant.

(3)Date of accident or incident.

(4)Identification of medical provider, if applicable.

(5)Identification of property repair vendor, if applicable.

(6)Identification of members or subscribers and, if applicable, adjusters.

(7)Identification of attorneys representing claimants, if applicable.

(8)Description of claim.

(9)Claimant’s driver license or California Identification card number, if applicable.

(10)Claimant’s social security number, if known to the insurer.

(11)Vehicle license numbers, if the claim involves automobile insurance.

(12)Vehicle identification numbers, if known and the claim involves automobile insurance.

§ 1875.16

Added by Stats. 1991, Ch. 1222, Sec. 3.

Unless otherwise provided by law, any authorized entity which receives any information furnished pursuant to this article shall not release that information to public inspection (1) until such time as its release is required in connection with a criminal or civil proceeding, or (2) is necessary to analyze and present information for release in an insurance claims analysis bureau’s annual report. Any information acquired pursuant to this article shall not be part of any public record nor subject to disclosure under the California Public Records Act.

§ 1875.17

Added by Stats. 1991, Ch. 1222, Sec. 3.

On or before May 1, 1992, and on or before May 1 of each year thereafter, any licensed insurance claims analysis bureau shall file with the department a report on the scope and extent of its activities in this state for the preceding year.

§ 1875.18

Added by Stats. 1997, Ch. 501, Sec. 3. Effective January 1, 1998.

(a)Every bodily injury, medical payment, or uninsured motorist claim made under a policy of automobile insurance shall be available, upon request, to law enforcement agencies in this state, whenever that claim relates to an event that occurred within the state.

(b)Every claim subject to subdivision (a) shall be available without regard to any limitation in the Insurance Information and Privacy Protection Act (Article 6.6 (commencing with Section 791) of Chapter 1), or any other provision of law, whether or not the law enforcement agency has formed a reasonable belief that a violation of law may have occurred with regard to the claim.

(c)(1) A licensed insurance claims analysis bureau shall provide automobile claims information, upon request, to a law enforcement agency pursuant to the authority in subdivision (a).

(2)A licensed insurance claims analysis bureau, and any person employed therein, that provides information pursuant to this section shall have the same immunity provided under Section 791.21 as any person disclosing personal or privileged information under Article 6.6 (commencing with Section 791) of Chapter 1.

(d)(1) Claims information requested by law enforcement agencies, pursuant to the authority in this section, shall be used solely for the purpose of investigating and prosecuting automobile insurance fraud. Those requests shall be narrowly formulated in order to protect the privacy rights of citizens of this state, while obtaining the information necessary to conduct specific investigations.

(2)The commissioner shall establish rules governing the access to, and use of, any information requested or obtained pursuant to this section, and the circumstances under which that information may be inspected and corrected.

§ 1875.20

Amended by Stats. 2005, Ch. 717, Sec. 15. Effective January 1, 2006.

Every insurer admitted to do business in this state, except those otherwise exempted in this code, shall provide for the continuous operation of a unit or division to investigate possible fraudulent claims by insureds or by persons making claims for services or repairs against policies held by insureds.

§ 1875.21

Added by Stats. 1991, Ch. 1222, Sec. 4.

Insurers may maintain the unit or division required by this article using its employees or by contracting with others for that purpose.

§ 1875.22

Added by Stats. 1991, Ch. 1222, Sec. 4.

Insurers shall establish the unit or division required by this article no later than July 1, 1992.

§ 1875.23

Added by Stats. 1991, Ch. 1222, Sec. 4.

For purposes of this article, “unit or division” may include the assignment of fraud investigation to employees whose principal responsibilities are the investigation and disposition of claims. If an insurer creates a distinct unit or division, hires additional employees, or contracts with another entity to fulfill the requirements of this article, the additional cost incurred shall be included as an administrative expense for ratesetting purposes.

§ 1875.24

Added by Stats. 2004, Ch. 596, Sec. 1. Effective January 1, 2005.

(a)If after examination, or upon the basis of other information, the commissioner has good cause to believe that an insurer to whom the provisions of this article apply does not comply with the requirements of this article, or with the regulations set forth in Article 2 (commencing with Section 2698.30) of Subchapter 9 of Chapter 5 of Title 10 of the California Code of Regulations, the commissioner shall notify the insurer of its noncompliance. The notice shall state in what manner and to what extent the noncompliance is alleged to exist, shall specify a reasonable time, not less than 10 days thereafter, in which the noncompliance may be corrected, and shall set forth the amount of any penalty that may be due under subdivision (b).

(b)Any insurer that fails to comply with the provisions of this article or with the regulations described in subdivision (a) shall be liable to the state for a civil penalty not to exceed five thousand dollars ($5,000) for each act, or, if the act was willful, a civil penalty not to exceed ten thousand dollars ($10,000) for each act. The commissioner shall have the discretion to determine what constitutes an act. However, when violations relative to the maintenance and operation of the unit or division are inadvertent, the violations shall be considered a single act for the purpose of this section. Any penalty imposed by the commissioner pursuant to this section shall be determined as provided in subdivision (d) of this section and Article 19 (commencing with Section 2591) of Subchapter 3 of Chapter 5 of Title 10 of the California Code of Regulations. Notwithstanding subdivision (c) of Section 2591.1 of Title 10 of the California Code of Regulations, enforcement of any provision of this section shall be deemed an enforcement action pursuant to Article 19 (commencing with Section 2591) of Subchapter 3 of Chapter 5 of that title.

(c)An insurer served with a notice of noncompliance described herein shall, within the time specified therein, do one or more of the following:

(1)Establish to the satisfaction of the commissioner that the noncompliance does not exist.

(2)Request a hearing, notice of which must be given at least 30 days prior to the date set for a hearing.

(3)Enter into a consent order with the commissioner to correct the specified noncompliance within the time period specified in the consent order.

(d)If, after hearing, the commissioner finds that the facts alleged in the notice of noncompliance are true, he or she shall issue an order requiring compliance with the provisions of this article within a reasonable time. An insurer that fails to comply with an order issued by the commissioner, including a consent order, shall be liable to the state for a civil penalty not to exceed ten thousand dollars ($10,000) for each day the insurer fails to comply with the provisions of the order. Any order, including any consent order, issued pursuant to this section shall specify the amount of the penalty due under subdivision (b), and shall indicate that an additional penalty shall be imposed for each day the insurer fails to comply with the order within the time specified therein. In addition to any other remedy provided by statute, regulation, or otherwise, the commissioner may direct the insurer to take any other corrective action that he or she may deem necessary and proper.

(e)The commissioner shall adopt regulations necessary to implement this section in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).