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True Crime of Insurance Fraud Video Number 55



See the full video at and at https://youtu.be/a08jdyC1sEg

Most insurance companies are formed by large companies with significant assets. They are capitalized with serious money that the insurer needs to cover losses until profits are made. The company is staffed with insurance professionals who believe in the concept of risk diversification. Insurers, whether new or old, provide a definitive service to the public.

Betty Bruja wanted to start her own insurance company. She had been an insurance broker for ten years. During the ten years she had trained with books and trainings from the Insurance Risk Management Institute, the Society of Certified Property and Casualty Underwriters, the Insurance Institute and the Insurance Claims Library. Through a dedicated and long study, Betty received the designation CPCU in the minimum time allowed by the Society of CPCU.

She studied underwriting and claims management. No person, Betty thought, was as knowledgeable about insurance as she was. No insurance company worked effectively. Massive gains could be made if she was just put in control.

For ten years, Betty Bruja tore into the trenches of the insurance industry and received a small income of 5% to 15% commission. She was frustrated. She knew she could make money if there was only capital to finance a new insurance company.

Bruja hired an independent adjustment company to investigate and adjust claims. Since none of the insurances had any wording, she denied coverage for most claims by creating an insurance exclusion to suit the claim. During the first year of her fraud program, she paid no claims and raised $ 500,000 in premiums.

Robin Sleuth was the owner of a small traveling carnival. He had bought a policy from Betty and renewed it with PPC. He was happy with the prize. He needed an insurance policy in the name of the city of Ojai because his carnival was set up on an empty plot owned by the city. Betty was slow to issue the form. Robin looked at his insurance file and noticed that he never received policy formulations from Betty. He faxed her a letter demanding a full copy of his insurance and a certificate.

Betty, who recognized a troublemaker, sent a message to Robin in which they announced, as they could not agree, that his insurance had been terminated and she returned the premium he had paid. Robin got angry. He was forced to cancel his appearance in Ojai and fight to get insurance through another agent. The prize was twice as big as he paid to Betty.

PPC immediately hired a private detective and lawyer with experience in fraud investigation. They flew to Robin Sleuth’s hometown and interviewed him. They obtained copies of all written evidence and were given Robin’s promise to keep the originals in a safe place that could not be destroyed.

The lawyer and investigator then flew directly to the city where Betty did business and came to her new panel office. They demanded to see Betty.

Betty, radiant in her tailored wool suit and silk blouse, greeted them politely. They told her who they represented and that she issued policies in the PPC’s name without authority. Betty was shocked. She denied that she issued policies without approval. She would do everything she could to help them. However, before discussing it further with them, Mrs Bruja wanted to talk to her lawyer.

Betty’s lawyer was an honest person. He would never agree to her deception. She needed something to show him. On her computer, she created a stationery for Nicholas Claus Insurance Services, Houston, Texas. The letter, which she created, was dated six months earlier. Claus, as Managing General Agent for PPC, authorized Betty, as the 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 an ongoing fraud. They reported Betty to the insurance department and notified the department of the agreement. The department, overloaded with other work, did nothing because PPC had solved its problem.

What was unknown to PPC, its lawyer or Betty’s lawyer was that she chose a new insurance company name the next day. Betty rolled in all her clients to Surety and Providence Insurance Company (SAPIC). She told everyone that she had been deceived by PPC but had protected them by obtaining insurance for them with SAPIC.

Betty is living well. Fraud seems to pay off for her. Soon she will earn enough money to actually capitalize on a legitimate insurance company.

Unfortunately, for Betty, a three-year-old child fell out of a WhirlyGig and became paralyzed. The child’s parents sued the carnival, which made a claim to Betty. She immediately and retroactively terminated the insurance and rejected the claim. The carnival had no choice but to file for bankruptcy and the child became a department of the state. Betty, emptied her bank account and moved to a retirement community in Sao Paulo, Brazil, never trying to get insurance again.

Insurance frauds come in many different forms. Betty harmed innocent people and profited from her crime. She should have been punished by the insurance ministry and her license to sell insurance is revoked. That did not happen and she now lives well in Sao Paulo.


(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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