There are a number of factors in play but one of the most prominent one is FRAUD. The FBI has estimated the cost related to FRAUD is in the billions per year which in turn costs an average of $ 500 – $ 1000 per year for families and an even larger amount for business owners. Auto and Workers Compensation Insurance claims seem to be where the largest increases are currently being seen.
The California Department of Insurance has a whole division dedicated to this issue: http://www.insurance.ca.gov/0300-fraud/0100-fraud-division-overview/0300-fraud-claims-and-forms/.
Another agency who monitors and reports fraud is the National Association of Insurance Commissioners:
Check out these websites for more information on how you can help prevent and report Fraud.