What Is the California Department of Insurance?
The California Department of Insurance (CDI) is a state governmental agency responsible for regulating various professionals and companies. They are tasked with investigating allegations of fraud and other forms of misconduct on the part of insurance brokers, companies, and other consumer-facing agencies.
What Is the CDI’s Purpose?
According to their site, the CDI’s primary purpose is to protect consumers from devious and deceptive behavior. Their goal is to provide safeguards for customers throughout the state by regulating specific conduct within the insurance industry.
California’s insurance marketplace is the largest in the United States. As such, the CDI has a wealth of resources at its disposal that enable its various divisions to aggressively and tactfully investigate allegations of misconduct by brokers, agents, companies, and more. They are also tasked with all of the following:
- Protecting California residents from excessive insurance rates
- Protecting California residents from discriminatory insurance practices
- Maintaining broker licensing standards
- Regulating claims payments
- Investigating claims of insurance fraud
- Prosecuting insurance fraud
- Conducting market reviews of insurance companies operating in California
The CDI is staffed with approximately 1,400 employees who have successfully recovered more than $84 million per year as a result of their stringent regulations across the state. In addition to achieving such monumental results, they field thousands of consumer complaints per year pertaining to insurance fraud and other practices.
The CDI and the Unfair Practices Act
One of the CDI’s main tasks is enforcing California’s Insurance Code. With this goal in mind, they must adhere to the state’s Unfair Practices Act, which is located in the code. The Unfair Practices Act is designed to protect consumers against unfair and abusive practices from insurance companies, insurance brokers, and insurance agents.
In line with the Unfair Practices Act, the CDI has issued guidance that currently governs all insurance claims made in California. This guidance prohibits insurance companies from engaging in deceptive practices, such as taking too long to approve a claim or denying coverage and providing deceptive information related to an insurance policy.
What Is the CDI Enforcement Branch?
With all of its regulatory obligations across such a massive swath of land, it should come as no surprise that the CDI has its own enforcement branch. This arm of the CDI is staffed with seasoned professionals who serve as the department’s investigative body.
The enforcement branch is divided into two distinct divisions: the fraud division and the investigative division. Although each division has separate protocols, they share the common goal of trying to protect California consumers from deceptive practices.
The CDI Fraud Division
The fraud division of the CDI consists of four separate programs that work to prevent fraud in each of the following areas:
- Disability and Healthcare
- Workers’ compensation
- Automobile insurance
- Property, life, and casualty insurance
Most of the crimes investigated across these divisions pertain to Section 550 of California’s penal code and the state’s insurance code. However, if other violations are uncovered in the investigation, they are reported to the appropriate regulatory and law enforcement agencies.
The CDI Investigative Division
The CDI’s investigative branch has received the authority to investigate violations of the California Insurance Code. Specifically, they are governed by Section 12921 of the code. If they uncover any evidence of wrongdoing during their investigation, they report it to the appropriate authorities pursuant to Sections 12928 and 12930.
How Does a CDI Investigation Work?
If the CDI has reasonable information that leads them to believe you broke the law or violated a regulation, they will move to suspend or revoke your license. Their route depends on the infraction’s severity and your personal history. Once the allegation is filed, it is made available on their website.
When the accusation is filed, you have 15 days to file a notice of defense. This notice is a formal way to request a hearing and to tell the CDI that you intend to fight the allegations that have been levied against you.
Failure to file a notice of defense within the allotted time frame means the CDI will revoke or suspend your license without allowing you to defend yourself.
This possibility is why having a qualified insurance license defense attorney by your side is crucial. The best time to contact the council is immediately after receiving the allegation.
How Does an Insurance License Defense Attorney Help with a CDI Investigation?
An insurance license defense attorney can help with a CDI investigation in various ways. First, the attorney will have likely dealt with a situation that is somewhat similar to yours. This experience means they will likely already have the insight concerning how to proceed, including how to begin effectively preparing for your defense.
Depending on the severity of the allegations, the CDI may offer a few settlement terms. In the case of severe allegations, they may only offer the chance to surrender your license.
If this is the situation, you and your attorney can decide whether to attend the hearing or accept the settlement and surrender your license outright.
S J Harris Law is Here to Help
If you have received notification that you are under CDI investigation or suspect that you might be under investigation in the future, you should seriously consider retaining counsel. S J Harris Law has decades of experience providing comprehensive license defense for professionals like yourself, and we can help you, too.
If you are looking to mount a robust defense against the CDI’s accusations, S J Harris Law will evaluate the facts of your case and make an appropriate determination.
Their focus is always on the safety and well-being of their clients, and their decades of experience have given them a comprehensive understanding of California’s labyrinth of insurance laws.
Don’t let one allegation destroy the career you have worked tirelessly to build. Contact us today.