New task force launched in California to fight against insurance fraud and an underground economy

California InsuranceThe California Department of Insurance has announced that it will be joining the Department of Industrial Relations to fight against the state’s emerging underground economy. The two agencies have formed the Labor Enforcement Task Force in order to crack down on the violations against the state’s insurance and labor regulations that are rampant in this offshoot economy. Insurance Commissioner Dave Jones notes that this economy is mostly comprised of businesses who hire employees that are not fit for certain types of work. These businesses often fabricate documents concerning their employees in order to gain support from the state through its various assistance programs.

According to Commissioner Jones, these businesses misclassify their employees and modify their payroll information in order to gain insurance benefits. These benefits are usually lower rates for workers compensation, but are sometimes associated with health insurance. These fraudulent activities are having an adverse affect on the state’s insurance industry, driving up premiums for consumers as insurance companies attempt to mitigate the effects of the acts.

The new task force will be launched on Sunday and will be a collaborative effort between a number of the state’s governing agencies, such as the Insurance Department, the Employment Development Department and the Contractor’s State Licensing Board. The task force will investigate several companies involved in fraudulent activities, but the identity of these companies has not yet been revealed.

For more general coverage information and rates on California insurance resources.

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