New SIU Regulations are Coming to Town
August 25, 2020

The California Department of Insurance (CDI) has amended its Special Investigative Unit (SIU) regulations, and the rules take effect Oct. 1, 2020. (10 CCR 2698.30 et seq.)  The new rules tighten the compliance requirements already in place, and notable changes include:

  • Stronger oversight on entities that insurers contract with – directly or indirectly – to perform SIU and antifraud duties;
  • An increased emphasis on using patterns or trends as red flags for fraud;
  • New guidelines for releasing information to the CDI’s Fraud Division and around the written procedures used by the insurer’s SIU;
  • A requirement to investigate all credible referrals of fraud;
  • Enhanced requirements leading up to and in the reporting of fraud to the CDI’s Fraud Division;
  • More detailed and strenuous requirements for training of insurer personnel and resources used by those personnel;
  • Requiring certain information in SIU Annual reports while also allowing insurers in holding company systems to reference holding company system SIU information in their SIU Annual Reports; and
  • Setting forth additional details on the finalization and resolution of SIU examination by the CDI.

Although the regulations take effect this year, insurers have until April 1, 2021 to update their contracts with other entities performing fraud work.  Companies can expect to be tested for compliance with the new rules through examination by the CDI’s dedicated SIU Compliance Office.

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