With Insurance Fraud on the Rise, Is Your Brokerage Operating Safely?

According to a recent survey from LendingTree, the insurance industry lost almost $308 billion in fraud in 2022.  This included approximately $45 billion in P&C insurance fraud (Colorado State University) and $74.7 billion in life insurance fraud.  According to the Federal Bureau of Investigation, these fraud numbers lead to American families paying an additional $400 – $700 a year in insurance premiums to cover the cost of fraud.*

As an insurance broker, ensuring your customers are getting the best insurance protection is imperative.  Giving customers the best insurance coverage for the best price and delivering this service to them in a safe and secure fashion so as to avoid fraud is the number one goal. Even something as simple as managing, tracking, and transmitting Certificates of Insurance is not safe from fraud.

In March of this year, two men pleaded no contest to several felony counts of insurance fraud totaling close to $54 million.  The workers’ compensation fraud involved the generation and distribution of fake insurance certificates.  According to the California Department of Insurance, the two men took an existing workers compensation policy and generated fraudulent Certificates of Insurance that they distributed to other professional employer organizations.  The two men ended up cheating the insurance company out of $29 million in premium and its customers out of an additional $25.5 million in fees.  Both men received 10 years formal probation as well as a fine of $350,000 along with additional restitution.

While most insurance brokers and insurance agencies believe that they will not be a victim of fraud, you must take the proper steps to ensure that you are protected.  The best way to do this is by using products and services that are focused on protecting you.  For example, one area that many brokers/agents take for granted is the transmission and management of Certificates of Insurance.   As more and more brokers use electronic systems to manage, track, generate and distribute COIs, the opportunities for fraud increase.  That is why you must ensure that your systems provider is focused on keeping this process safe from all types of fraud.

For the past 25 years, Certificate Exchange has been the industry leader in providing for the safe and secure management and transmission of Certificates of Insurance.  In fact, Certificate Exchange has the industry’s only patented process by which companies can safely transmit multiple COIs to multiple destinations simultaneously.  Not only are companies more efficient in how they operate, but they have the peace of mind knowing that they along with their customers are safe from any type of fraud associated with their insurance certificates.

If you are a large insurance brokerage that is looking for a better way to manage your COI distribution process, then you should reach out to the experts at Certificate Exchange.  Because the last thing you want is to be the next big insurance fraud victim.

*Value Penguin by Lending Tree, Insurance Fraud Statistics, June 20, 2023