Problems with Agency Producers Fraud????

[kebico]

Does anyone has problems with agency producers? like agency producers signing up directly with MGA's that offer commercial insurance product. They are getting paid salary and commissions to produce for the agency, getting leads from the agency and they are ready to bind coverage, they will bind it under their own name and get full commissions without the agency owner/broker knowledge of what went on.

When producers sign up directly with an MGA, they can produce their own policies, like they own an agency within an agency without and marketing or business expense. They cannot be tracked and MGA will not give you any information, because it is confidential. If you check their list on insurance company appointment with Department of insurance it will show none, because they are not appointed directly with the insurer.

Is that insurance fraud for misleading clients who is the agent of record, insurance embezzelment, theft by producers, maybe they should br reported to State Board of Insurance for their actions.

Any advice, how to handle this issue?????

 

[DHK]

It's a violation of the employment contract for selling away from the approved contracts.

It is a conflict of interest - ESPECIALLY when you are paying a salary and benefits. It can lead to misunderstandings as to WHO is liable for errors or omissions in the sale of that policy.

I wouldn't call it insurance fraud, unless they committed fraud against the client when selling the policy.

This is a violation against the employer agency, not against the client. You have a labor law issue, not necessarily an insurance compliance issue.

If you don't have this outlined in an employment contract specifying that you only can market policies from approved contracts through your agency, you need to fix that immediately.

If it's already there... you can terminate these agents for violating their ethical duty to their employer and their integrity. You cannot trust such agents to do right by your clients if they won't do right by you.

 

[indienoise]

There is not a single mga I've done business with that did not require e&o Dec page. Not sure how the rogue producer would get past that without questions being asked When the policy is not his...

 

[walthamny]

I have seen things like this many times. Unethical for sure. I also have never seen state Insurance Departments doing anything about it. It would be one agent complaining about another agent, or an insurance company complaining about another one, these complaints usually go nowhere. Now this will only be an issue for the agent when they are sued. A lawyer can paint the agent as a very unethical person and expose him. Even this does not mean much because being insurance agent in front of a jury, you are presumed to be a liar anyway. You don't have much to loose.

Being unethical in the long run will hurt your potential for referrals though. If you keep breaking the law, most people may take the savings but they will be reluctant to refer you because of character. So you will close more in exchange for lower referral ratio, which means you have to keep finding new people to sell