Calif. Commissioner Addresses Bogus WC Insurance

June 26, 2003

California Insurance Commissioner John Garamendi released a statement regarding bogus workers’ compensation insurance:

“Bogus workers’ compensation insurance is a serious and growing threat to employers in the State of California. An alarming number of reports indicate that unscrupulous firms are using the dire situation in this broken workers’ comp system to entice employers with sales pitches that seem too good to be true. Unfortunately, they are too good to be true,” Garamendi said.

“My Department is investigating the mounting complaints of those who are victimized by this sham. With premiums at historic highs, businesses too often reach for the first seemingly affordable coverage offered. By the time they learned they have been duped, it is too late.

“California law calls for severe and immediate penalties to be meted out by the Department of Industrial Relations (DIR) should an employer operate without proper workers’ comp coverage. Whether intentional or inadvertent, the penalties for this violation remain the same.

“I pledge to do everything within my power to root out these unauthorized frauds and protect the honest employers who are fighting the odds to obtain affordable workers’ comp coverage. The California Department of Insurance (CDI) is working with DIR and the Employment Development Department to launch an educational outreach effort to make employers aware of the dangers and to give them answers.”

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