Agents behaving badly

According to an article in JD Supra, the agent told policyholders that their policy was “outdated” and should be replaced with the VUL policy providing for the same level of coverage for the same $50 monthly premium. The real cost to keep the policy in effect, of course, was significantly higher.

A bench trial judge ruled that the defendants had violated the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) because they purposefully and intentionally misrepresented the life insurance policy’s terms, and the policy as issued and delivered differed materially from the policy that was sold. The judge awarded the policyholders $125,000 in statutory damages and $175,000 in attorneys’ fees and costs.

• Fake company, real life insurance nets agent 8 years: Cantonment, Fla.-based insurance agent Randall Petersen was recently sentenced to eight years in state prison followed by seven years of probation after being found guilty on April 8 of racketeering and money laundering by Circuit Court Judge Ross Goodman.

Operating under multiple business names, Petersen conducted a fraudulent insurance scheme that involved his theft of several hundred thousand dollars of commissions and bonuses from American National Insurance Company and Liberty National Insurance Company.

According to coverage in the Pensacola News Journal, Petersen’s scheme included advertising job opportunities online for a non-existent company, and induced hundreds of applicants to provide information for life insurance that he and his associates described as free job benefits. He used the information to complete life insurance applications, received commissions and bonuses totaling hundreds of thousands, and let the policies lapse for nonpayment before the companies realized the insureds were not employees.

A hearing will be held at a later date to determine restitution, which the state will request will be in excess of $500,000. The case resulted from an investigation by the Florida Division of Insurance Fraud.

In hearing of cases like these three, it’s always surprising to think the wrong-doers ever thought they could get away with it, and reassuring to know there are forces at work – like the Florida Division of Insurance Fraud—to make sure they do not.