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On his 50th birthday, Louie concluded that he was a failure. For thirty years he sold insurance to the public. For a $ 40 commission, Louie often spent hours explaining a tenant’s landlord’s policy to a customer. Next year, because another broker promised to save the client $ 5 in premiums, they did not renew and he received no commission.
Louie had always been a dedicated and loyal insurance broker. He put his customers’ interest above his own. If he could save them money (even if it would cost him a commission), he placed them with the cheapest insurer. In return, he saw nothing but mockery and disloyalty.
Louie decided to change his life now that he was middle-aged and a member of the AARP. Given his meager income, retirement at the age of sixty-five seemed almost impossible. He needed a way to earn enough money in a short amount of time to retire. His knowledge of insurance and his salespeople’s understanding of his customers’ greed gave him a solution.
EMPLOYEE IV YOU WERE BORN.
Louie went to each of his commercial insurance customers with his plan. He explained that if they allowed him to become an employer for his employees, the cost savings in benefit plans would offset his contribution. The company’s total staff cost, he explained, would be lower. He would charge each customer 3% of the gross salary of each employee and the actual cost of their benefits. For the 3% fee, he would submit all employment forms and issue W-4 and W-2 forms; collect all employment taxes from their customers and send them to the government; Fill out all the forms and give each employee a “cafeteria” plan with benefits. The employees would be satisfied and the employers would be satisfied. The employer would have absolute control over the employees and Louie would only be their title employer.
Although the idea sounded too good to be true, 80% of his customers decided to include Louie in the proposal.
EMPLOYEE IV You then applied for and obtained an occupational injury insurance for all its employees. Louie, who was a frugal man, told the insurance company for work injury compensation that he had 400 employees who all worked in government agencies (the lowest level of compensation for workers).
In addition to paying the premium he received in advance from each of his clients, Louie’s only other expense was to issue paychecks. A payroll service charged him only $ 300 a month to issue all the checks and prepare the reports for him. He paid a bookkeeper only $ 8 an hour to take care of all the other accounting requirements in his business. EMPLOYEES IV YOU earned more in the first two months of the business than Louie had done in any of the past five years.
By the time Louie was fifty-five, he had invested his profits in a portfolio of stocks, bonds and fund units that were conservatively valued at $ 3,000,000. The income from the portfolio would support Louie in comfort through his retirement.
EMPLOY IV YOU’s insurance company for occupational injury compensation, after receiving Louie’s income reports, reduced his premium each year. Louie used the “audits” to increase his profits five years in a row.
On the company’s fifth anniversary, Louie’s 55th birthday, he decided he had made enough money and offered the company for sale to a legitimate employee leasing company. Louie took the $ 2,000,000 he received from the purchase, added the cash from the sale of his stock portfolio and moved it to Kingston, Jamaica.
He bought a villa overlooking the sea and happily lives out his pension.
Insurance fraud is a gender equality offense. It is committed by every race, religion, national origin, gender, sexual preference or profession, even an insurance agent. It is a crime no matter who commits the crime or how successful the criminal is. A lack of investigation and unwarranted confidence enabled Louie to successfully deceive several policyholders and those for whom he sold his services. When something, like Louie’s business, seems too good to be true, it is.
(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 management, non-insurance 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 email@example.com.
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