Report of the Commissioner DAVE JONES, INSURANCE COMMISSIONER CALIFORNIA DEPARTMENT OF INSURANCE Insurance Protection for All Californians California Department of Insurance 2017 Annual Report Table of Contents CONSUMER SERVICES and MARKET CONDUCT BRANCH .......................................... 1 CONSUMER SERVICES DIVISION ................................................................................... 3 CONSUMER COMMUNICATIONS BUREAU ............................................................................... 5 CLAIMS SERVICES BUREAU ........................................................................................................ 6 HEALTH CLAIMS BUREAU ............................................................................................................ 6 RATING AND UNDERWRITING SERVICES BUREAU ............................................................. 7 MARKET CONDUCT DIVISION ...................................................................................................... 8 FIELD CLAIMS BUREAU ................................................................................................................ 9 FIELD RATING AND UNDERWRITING BUREAU ...................................................................... 9 HEALTH POLICY and REFORM BRANCH ....................................................................................... 11 RATE REGULATION BRANCH .......................................................................................................19 RATE FILING BUREAUS ..................................................................................................20 RATE SPECIALIST BUREAU ...........................................................................................21 ENFORCEMENTBRA NCH ............................................................................................................. 25 SECTION ONE: ENFORCEMENT BRANCH OVERVIEW ............................................................ 26 SECTION TWO: INVESTIGATION DIVISION ................................................................................ 29 SECTION THREE: FRAUD DIVISION ............................................................................................ 35 SECTION FOUR: WORKERS’ COMPENSATION INSURANCE FRAUD PROGRAM .......45 SECTION FIVE: WORKERS’ COMPENSATION INSURANCE FRAUD PROGRAM APPENDICES ...................................................................................................................51 FINANCIAL SURVEILLANCE BRANCH ...................................................................................... 107 FINANCIAL ANALYSIS DIVISION ..................................................................................108 FIELD EXAMINATIONS DIVISION ............................................................................................. 109 LIFE AND PROPERTY & CASUALTY ACTUARIAL OFFICES ............................................ 110 TROUBLED COMPANIES ..............................................................................................111 PREMIUM TAX AUDIT BUREAU ............................................................................................... 111 OFFICE OF PRINCIPLE-BASED RESERVING ....................................................................... 112 LEGAL BRANCH .............................................................................................................................. 113 AUTO ENFORCEMENT BUREAU ..................................................................................114 CORPORATE AFFAIRS BUREAU I ...............................................................................115 CORPORATE AFFAIRS BUREAU II ..............................................................................116 ENFORCEMENT BUREAU SACRAMENTO ................................................................... 118 ENFORCEMENT BUREAU SAN FRANCISCO ...............................................................119 California Department of Insurance 2017 Annual Report FRAUD LIAISON BUREAU .............................................................................................121 GOVERNMENT LAW BUREAU ......................................................................................122 POLICY APPROVAL BUREAU ......................................................................................122 RATE ENFORCEMENT BUREAU ..................................................................................123 OFFICE of the SPECIAL COUNSEL .................................................................................................. 125 Administrative Hearing Bureau .................................................................................................... 129 LEGISLATIVE OFFICE ................................................................................................................... 131 COMMUNITY PROGRAMS and POLICY INITIATIVES BRANCH .............................................. 134 CONSUMER EDUCATION AND OUTREACH BUREAU ................................................135 CALIFORNIA LOW COST AUTOMOBILE INSURANCE PROGRAM ............................ 138 CALIFORNIA ORGANIZED INVESTMENT NETWORK .................................................139 INSURANCE DIVERSITY INITIATIVE .............................................................................140 OFFICE OF THE OMBUDSMAN .....................................................................................143 SPECIAL PROJECTS DIVISION ....................................................................................143 STATISTICAL ANALYSIS DIVISION ..............................................................................144 CANNABIS INSURANCE INITIATIVE ....................................................................................... 147 COMMUNICATIONS and PRESS RELATIONS OFFICE ................................................. 149 ADMINISTRATION and LICENSING SERVICES BRANCH ......................................................... 153 FINANCIAL MANAGEMENT DIVISION ..........................................................................154 HUMAN RESOURCES MANAGEMENT DIVISION................................................................. 160 INFORMATION TECHNOLOGY DIVISION............................................................................... 162 LICENSING SERVICES DIVISION ............................................................................................. 164 OFFICE of CIVIL RIGHTS ................................................................................................................ 170 OFFICE of CLIMATE RISK INITIATIVES...................................................................................... 172 ENTERPRISE PLANNING, RISK, and COMPLIANCE .................................................... 174 INFORMATION SECURITY OFFICE .............................................................................................. 175 OFFICE OF ORGANIZATIONAL ACCOUNTABILITY ................................................................. 175 OFFICE OF STRATEGIC PLANNING ............................................................................................ 176 CONSERVATION & LIQUIDATION OFFICE ............................................................................. 179 California Department of Insurance 2017 Annual Report STATE OF CALIFORNIA Dave Jones, Insurance Commissioner DEPARTMENT OF INSURANCE 300 Capitol Mall, Suite 1700 Sacramento, CA 95814 (916) 492-3500 (916) 445-5280 (FAX) Insurance.ca.gov August 1, 2018 The Honorable Edmund G. Brown, Jr. Governor State of California State Capitol, Suite 1173 Sacramento, CA 95814 Dear Governor Brown: I am pleased to provide you with the 2017 Annual Report of the Insurance Commissioner as required by California Insurance Code (“CIC”) section 12922. The report describes in detail the work of the California Department of Insurance (CDI). The Department’s core function, as the regulator of the sixth largest insurance economy in the world with insurers collecting more than $310 billion in premium annually in California, is protecting consumers and the integrity, health and vitality of the insurance marketplace. The mission of CDI is "Insurance protection for all Californians.” We succeed in our efforts by enforcing insurance laws and regulations, assisting consumers in their dealings with insurers, and using innovation to improve services for insurance producers and consumers. My administration has made considerable progress on an ambitious consumer protection agenda. As of publication, the following are highlights of what the Department has accomplished in 2017 by branch. Consumer Services and Market Conduct Branch The Consumer Services and Market Conduct Branch's (CSMCB) focus is consumer protection, and it accomplishes this by educating consumers, mediating consumer complaints, and enforcing applicable insurance laws. CSMCB enforces applicable insurance laws during the investigation of individual consumer complaints against insurers and through on-site market conduct examinations of insurer claims and underwriting files. To accomplish some of these tasks, the Branch manages several mandated programs for the Department such as: Investigating complaints received from consumers, health care providers, and others; Responding to inquiries received through the Department’s toll free Hotline; Disseminating complaint statistics, California Department of Insurance 2017 Annual Report enforcement actions and alleged violations cited during its investigation