Insurance regulators in California say a 31% increase in vehicle arson fraud cases in 2008 indicates that the economy is driving residents to take drastic measures to cash in on policies.

California Commissioner Steve Poizner said that recently compiled statistics by his department show “financially desperate residents and scam artists” may be committing more auto insurance frauds.

The California Department of Insurance witnessed the 31% increase in fraud cases and 107 more referrals for suspected automobile arson versus 2007, Poizner said. Overall, the department received nearly 300 additional suspected vehicle theft and vehicle arson cases statewide in 2008 than in 2007.

The CDI also received about 200 more suspected vehicle theft fraud case referrals in 2008 versus 2007.

Poizner said many Californians are facing “a host of financial challenges in today’s economy,” but reminded consumers that breaking the law and committing insurance fraud will only add to their troubles.

“Department of Insurance investigators have seen an increase in suspected automobile arson and theft fraud cases recently, and our enforcement experts are working hard to crack down on anyone attempting to skirt the law for financial gain,” the commissioner said in a statement.

While there was an increase in suspected vehicle arson and theft referrals from 2007 to 2008, the CDI said the total number of suspected fraud case referrals received for all automobile categories, including inflated damages and vandalism, has remained relatively constant since 2007.

The CDI said nearly 1,900 insurance fraud-related arrests have been made by its 16 enforcement division branches since Poizner took office in 2007 – more arrests than have been made during any other two year period, under any previous insurance commissioner.