An insurance license is truly a license to steal, and done well, almost without risk of detection or punishment. There is little in the way of hard statistics nationally, so actual knowledge of the incidence is poor to nonexistent. In addition, the wheels of insurance regulatory departments grind very slowly indeed, such that guilty agents sometimes continue with suspected thefts for years, and face mild discipline at worst upon conviction. It is generally felt that the opportunities for independent agents to steal are somewhat greater, as the captive agents are more closely controlled by their carriers. The very large commercial brokers are not immune, some having been charged with stealing tens of millions in client premiums.

Clearly the web has exploded opportunities for premium theft. Internet-based fraud doesn't even require so much as a license. If you are inclined to pay premium to a site without verifying its real-world existence, your entrepreneurial days are surely numbered.

Along with the internet explosion, inexpensive printing technology has enabled anyone with a PC & very basic graphics editing ability to produce pretty much any document they want.

The most common scenarios involve agents who collect money & simply never place insurance policies. This is highly lucrative, but carries with it the decided risk that claims may occur and that the theft will be exposed. While it is almost certainly the most common scheme, there are far less risky methods. Agents also victimize premium finance companies by fabricating premium loan applications on nonexistent insurance, keeping the money. Agents can also create fictitious clients and applications to obtain commissions from unsuspecting insurance carriers.

One recently-arrested California broker reportedly has issued more than 2,700 - yes that's 2700 - fake policies to various entertainment, special events and sports clients since early 2001. He reportedly pocketed more than $3.8 Million in the first two years.

It would never occur to some policyholders to simply look at the actual policy to see whether the amount they paid in premium matches the policy, or whether any erasures or alterations have been made to the premium figures. (Other policyholders probably don't even so much as follow through to be certain an actual insurance policy is supplied by the agent.) While certain fees, taxes or other charges may be legitimately billed in addition to the policy premium, the amount listed as pure premium on your policy should always match the premium amount listed on your invoice. Anything billed in excess of the listed premium should be separately itemized & explained.

It is astonishing how often commercial insurance clients pay their premium invoices twice.

Premium audits, vehicle changes, deletions, and any number of other endorsement changes may produce large credits which do not find their way back to policyholders. In many cases, the client is unaware that such credits even exist. An agent who withholds return premium from his client knows that upon discovery, he merely has to make the payment to avoid any further question, and can pass it off as an "accounting" error.

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