What’s to stop a scam artist from pretending to be an agent of such-and-such well known insurance company and selling phony policies ostensibly from that company? I’ve never heard of such a thing being done.
To the point: suppose you get contacted by someone claiming to be an agent for such-and-such well known insurance company offering a policy at a much better rate than what you’re paying now, do you need to take some measure to make sure the guy is an actual agent selling an actual policy (e.g. contact the company directly and confirm that the guy is an agent and that the phone number he’s calling you from matches what they have listed), or can you just assume it’s legit? Because you hear about a lot of scams but I’ve never heard of one like this happening, so maybe there are technical reasons why it can’t work.
Nothing, really. Same reason there’s nothing to stop me from pretending to work for the local cable company and selling you service. If I were a scam artist, however, I’d be concerned about fake insurance for a few reasons. First, I assume it would be insurance fraud, so add that to whatever other charges you get hit with if you get caught. Plus, if you’re using the name of a well known (or any) company, there’s a good chance they’re going to come after you as well. On top of that, it wouldn’t surprise me if a judge held you liable for any claims made under any fake plans you sold.
There’s also the issue of getting paid. How much is insurance, a hundred bucks a month. You’re going to have to dupe people into either paying upfront, in cash, for some large term or get them to mail you a payment each month.
That all seems like a lot of work and a lot of risk for very little reward.
You could start by not buying insurance (or anything) through cold calls, door to door sales people or random mailings you get. If you’re unsure if the person is legit, in this day and age, every insurance company likely has directory of agents on their website so you could verify it from there.
It’s probably also safe to assume they’re legit if they have an office in a strip mall with “American Family Insurance” over the top of it.
But, no matter what you decide, there’s harm at all in calling the parent company or checking their website to make sure the person is legit.
You’re calling from outside the US. How do you think the IRS/Social Security/tech support/refund scams work?
You talk people into paying up front with gift cards.
It’s not the most uncommon thing to happen with car warranties. You buy an extended warranty from the car dealer. They’ve been known to cash the check & ‘forget’ to submit the paperwork. Many people never attempt to use their insurance so the percent that the dealer should have remitted to the insurance company they just pocket. Occasionally, the buyer will contact the warranty company, who doesn’t know about the policy so they contact the dealership who states they ‘accidentally’ didn’t submit the paperwork & funds. If it happens enough, the insurance company catches on & reports it to the po-po.
I work in the commercial insurance area. I witnessed several years ago we received a claim from a policyholder with our company name as the carrier, but a policy number that was nothing like our policy numbers (completely different format, etc.).
The thought very much occurred to several of us that a retail agent (or possibly even a clueless business owner?) may have “created” the policy on their own. It was forwarded to our internal fraud folks, but I never heard the outcome (outcome #1 was definitely we disclaimed any coverage, but I don’t know if the source of the policy was determined and…uh, dealt with).
The scam I heard is basically people come and say they’re from your local (whatever) company and say you qualify for a new cost saving plan. Then they sign you up for their own personal service which actually does provide you with said product but less so hoping you dont actually notice and they pocket the difference. It’s a scam in that they make you think you’re changing plans within the company but you’re actually changing plans to a different provider.
That reminds of phone slamming (remember when slamming and cramming seemed to be in the news every day), where someone would fraudulently switch you over to their phone service without telling you.
Similarly, I’ve seen a few instances where a sales person for a company we’d been buying from for years, would quit and start their own competing business. Naturally, they’d call their old customers, but from time to time, you’ll get someone that will do that and not inform you that they left the company. Sometimes even going so far as to generate invoices that either look like their previous employer’s invoices or even (illegally, I’m sure) having their name at the top.
In one case, we didn’t know it happened until the business we’d been buying from to begin with, called to let us know it was happening.
I can see how it would be very easy with insurance. Especially if it’s an agent from the same company you already do business with. Lower a limit here, raise a deductible there and you could easily save someone a good chunk of change each month.
One of the nice things about worker’s compensation insurance, at least in Wisconsin, is that all the rates are set by the state. The insurance company that you actually buy the insurance from only brokers the deal, works with the customer and gets a (state set) percentage of the premium. What that means is that when another insurance company tells me they can lower my worker’s comp rates, I can tell them to pound sand and not wonder if maybe they could have.
But not everyone knows this and since you pay an estimated rate throughout the term and then reconcile it at the end, sales person can easily lower your rates, but it’ll catch up with you eventually. Sure, they can play with some numbers and save me $500/mo, but I’ll get a $6000 bill at the end of the term.