I’m Going into the Insurance Business

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Most insurance companies are formed by major corporations with considerable assets. They are capitalized with serious money needed by the Insurer to cover losses until profits are made. The company is staffed with insurance professionals who believe in the concept of spreading risk. The insurers, whether new or old, provide a definite service to the public.

Betty Bruja wanted to start her own insurance company. She had been an insurance broker for ten years. In those ten years she had trained herself with books and training courses from the Insurance Risk Management Institute, the Society of Certified Property and Casualty Underwriters, the Insurance Institute and the Insurance Claims Library. By devoted and lengthy study Betty obtained the designation CPCU in the minimum time allowed by the Society of CPCU.

The lawyer and investigator then flew directly to the city where Betty did business and arrived at her new paneled offices. They demanded to see Betty.

Betty’s lawyer was an honest person. He would never go along with her fraud. She needed something to show him. On her computer she created a letterhead for Nicholas Claus Insurance Services, Houston, Texas. The letter, which she created, was dated six months before. Claus, as Managing General Agent for PPC, authorized Betty, as exclusive agent in her state, to write CGL policies for carnivals, bungee cord facilities and hang glider parks.

PPC and its lawyer were satisfied. They had stopped a fraud in progress.  The Department, overburdened with other work, did nothing since PPC had solved its problem.

Betty rolled all of her clients into Surety and Providence Insurance Company (SAPIC). 

Unfortunately, for Betty, a three-year-old child fell out of a WhirlyGig and became paralyzed. She immediately and retroactively cancelled the policy and refused the claim. The carnival had no option but to file bankruptcy and the child became a ward of the state. 

Betty, emptied her bank account and moved to a retirement community in Sao Paulo, Brazil and never tried to be in the business of insurance again.

ZALMA OPINION

Insurance fraud comes in many different guises. Betty hurt innocent people and profited from her crime. She should have been punished by the Department of Insurance and her license to sell insurance pulled. It didn’t happen and she is now living well in Sao Paulo.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, is available at http://www.zalma.com and [email protected].

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