The insurance industry is faced with fraud cases of all types.  Costs associated with paying fraudulent insurance claims ultimately affect insurance rates.  In order to combat fraud of all types, insurance companies employ highly trained investigators to examine possible cases of insurance fraud.

Recently,  a Texas family pleaded guity in a large supplemental insurance fraud scheme.  According to the U.S. Attorney’s Office and the Associated Press,  seven family members including one probation officer have been convicted as co-conspirators in a $3 Million insurance fraud scheme.

The Texas family was among a group of 27 defendants that attempted to defraud AFLAC by filing thousands of false claims under the company’s Accident-Only Supplemental Insurance Plan.

According to a news release from the U.S. attorney’s office for the Southern District of Texas, U.S. Attorney Kenneth Magidson, a former probation officer along with his mother, two aunts, and three cousins, pleaded guilty on november 14 in McAllen in the insurance and wire fraud scheme.

According to the Insurance Journal, “the six others who pleaded guilty were Mary Cedillo of Edinburgh, Martha Ortega, Yolanda Segovia, Candida Chavez, Lori Chavez and Anissa Chavez of McAllen, Texas.”

U.S. attorneys stated that the defendents used the same two Reynoso, Mexico doctors to prepare and file approximately 21,000 false injury claims with Aflac.

The investigation into this insurance fraud ring, was conducted by the FBI.  Assistance was given by Aflac’s special investigations unit in Georgia.

Ten people pleaded guilty in the case in early November and 20 others pleaded guilty in early August.

Source: U.S. Attorney’s Office, Associated Press, Insurance Journal

This news article was originally posted by The Insurance Journal online.

A former northeastern Pennsylvania insurance executive has been sentenced to 5 1/2 to 16 1/2 years in state prison in what prosecutors said was a pyramid scheme worth at least $7 million.

Brian Murray, 68, former head of Murray Insurance Agency Inc., was arrested in July, 2010 by agents from the state attorney general’s insurance fraud section. He pleaded no contest in June to felony counts of criminal conspiracy, theft by deception and theft by failure to make required disposition of funds. Murray was sentenced in Lackawanna County Court.

Prosecutors said he and others took premiums from new clients to conceal the thefts from others and never procured the insurance the customers thought they were paying for. Moses Taylor Hospital, Mount Airy Casino Resort and the University of Scranton were among the alleged victims of Murphy’s fraud.

Some of the fraud was uncovered after Pennsylvania Manufacturers Insurance and Travelers Insurance conducted audits of Murray’s accounts.

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Courtesy of the Insurance Journal

Bank of America agreed to offload its Balboa insurance portfolio to Australia’s QBE Insurance for more than $700 million, the latest in a string of asset sales by the U.S. lender as it recovers from the global credit crisis.

Bank of America, which last year sold stakes in BlackRock and China Construction Bank to help meet government bailout-aid repayments, said QBE would assume all of Balboa’s $1.2 billion in insurance liabilities.

Shares in QBE, Australia’s largest insurance group, jumped 7.7 percent after it announced the deal, their biggest one-day gain in three years.

Fund managers said the purchase would bolster QBE’s U.S. operations, while investors were relieved the company was not planning a big capital raising to fund the deal as feared.

QBE’s deal-hungry chief executive, Frank O’Halloran, has made more than 75 acquisitions in 10 years to expand into 50 countries. QBE acquired U.S. underwriting agency ZC Sterling Corp for $575 million in 2008.

“We will continue with our current strategy of growth by acquisition,” said O’Halloran, who joined QBE in 1976 and has led the company for 13 years. His stake in the company is worth more than $200 million at current prices.

The deal with Bank of America follows a string of takeovers involving Australian insurers. Life insurer Tower Australia in December agreed to a $1.2 billion offer from shareholder Dai-ichi, while AMP Ltd has made a $13 billion bid for AXA Asia Pacific.

Bank of America said QBE would assume all of Balboa’s liabilities in exchange for an equivalent amount of cash and other assets through a reinsurance transaction.

QBE entered into a 10-year distribution agreement with the bank for lender-placed insurance and real estate owned programs and certain voluntary consumer insurance products under the deal.

“They get access to distribution and hence the profits from the underwriting in return for taking on the current book and paying $700 million,” said Peter Vann, portfolio manager at Constellation Capital Management.

Bank of America said last year it planned to sell Balboa as part of asset sales to raise $3 billion to complete its repayment of U.S. government bailout funds. It has since raised the funds, joining the list of U.S. banks repaying money received under the government’s Troubled Asset Relief Program.

It said the transaction was expected to result in a gain and it would retain Balboa’s net tangible equity of $1.7 billion, which would be redeployed as the Balboa insurance liabilities expire.

QBE said it expected the annualized gross earned premium and net earned premium from the distribution agreement to be around $1.5 billion and $1.3 billion, respectively.

“The underlying business doesn’t seem to be tracking as well as hoped, but they have plugged that gap through this acquisition,” said Mark Nathan, portfolio manager at Arnhem Investment.

QBE will fund the deal through new short-term bank facilities and expected profits for 2011 and a dividend underwriting arrangement, quashing speculation on Thursday it was planning a $1 billion capital raising.

Contact: David Berry, 214-717-4326      

 TXINSURANCEPRO.COM Offers ID Theft Prevention Tips

Dallas, Texas – TXINSURANCEPRO.COM advises consumers to be well aware of the identity theft epidemic that is happening all around us. Thieves only need one single piece of personal information to steal your identity and turn your financial life upside down. According to the Federal Trade Commission there are nearly 10 million people, or five percent of the adult population, who become victims of identity theft each year. Identity theft costs victims an estimated $5 billion in out-of-pocket expenses from trying to reclaim their good credit.

            With technology advancing every day, it is important to know what you can do to protect yourself before it is too late. TXINSURANCEPRO.COM and Travelers, the first company to offer identity fraud expense reimbursement insurance, recommend the following identity theft prevention tips:

• Check your credit report, which is available free once every 12 months at www.annualcreditreport.com from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.  If you suspect that there are any inaccuracies, call the bureau immediately.  (Call Equifax at 800.685.1111; Experian at 888.EXPERIAN; or Transunion at 800.888.4213.)
• Protect your Social Security number.  Do not use your SSN as an identifier at work, school or on your driver’s license. Request a new number to substitute as an ID if this is assigned automatically.
• Create passwords and PINs that are difficult for others to guess but easy for you to remember. Memorize the numbers to avoid having to write them down.
• Buy a shredder to destroy any financial and personal documents before throwing them away. This includes bills, statements and pre-approved credit card offers.
• Check your wallet:  Do not carry your Social Security card, birth certificate, passport, or extra credit cards unless absolutely necessary.
• Never put outgoing documents that contain personal information in your mailbox to be picked up; drop them directly at the post office or a postal service mailbox.
• Be aware of your surroundings especially when using an ATM, entering PINs or making a purchase with a credit card. Scam artists can easily look over your shoulder, or even spy from far away to steal your information.
• Use caution when responding to, or clicking on, an unfamiliar or unsolicited email. It is very easy for someone to scam you by using a seemingly authentic Web address.
• Be aware of your personal information. Know where it is going and to whom if you choose to enter it online. Read each Web site’s privacy policy and check for the padlock icon on the bottom of the screen to help ensure your privacy.
• Avoid emailing personal or financial information to anyone. It is much safer to furnish this information over the phone, provided you are the one who initiated the call.
• Report any suspicious activity to the Federal Trade Commission (FTC) immediately. For more important prevention tips visit the FTC Web site at www.consumer.gov/idtheft.

            Travelers offers identity fraud expense coverage as an endorsement to a Travelers homeowners, condo or renters policy. For only $25 per year, this insurance provides $25,000 of coverage for expenses incurred due to identity theft including:

• Lost wages (up to $1,000 a week for five weeks)
• Reasonable attorney fees incurred, with prior approval
• Telephone, certified mailing and notary charges
• Loan re-application fees
• Daycare and eldercare expenses

      In addition, Travelers now offers resolution services that can provide you with the help you need in the event you become a victim of identity theft.  A consumer fraud specialist will guide you through the steps of reclaiming your identity and repairing your damaged financial history, including ordering credit reports, alerting credit reporting agencies, enrolling you in six months of daily credit monitoring, and preparing dispute letters on your behalf.

      “Recovering as a victim of identity theft can be a long, expensive and very complex process,” said [AGENCY PRINCIPAL, TITLE].  “By adding identity fraud expense coverage to your policy, you can protect yourself from the out-of-pocket expenses associated with cleaning up your credit and feel secure in the knowledge that qualified fraud specialists will be there to help you through the process.”

      Established in 2007, TXINSURANCEPRO.COM is an independent insurance agency offering a full range of insurance products including [AUTO, HOME, LIFE, ETC.].  TXINSURANCEPRO.COM is a member of NAAIA, NAIFA and supports many local charities].     

For information and quotes on insurance coverage, please visit           

TXINSURANCEPRO.COM at 2695 Villa Creek Drive #175, Dallas, TX  75234  or call 214-231-9273.

About Travelers

Travelers understands that life and business are inherently dynamic and that the best way to serve agents and policyholders is to deliver insurance that evolves to stay in-synch with life and business as they change. For more information on being in-synch, visit www.travelers.com.

            The Travelers Companies, Inc. (NYSE: TRV) is a leading property casualty insurer selling primarily through independent agents and brokers. The company’s diverse business lines offer its global customers a wide range of coverage in both the personal and commercial settings, including automobile, homeowners, construction, small business, oil and gas, ocean marine, surety and management liability, global technology and public sector services. Travelers is a Fortune 100 company, with 2007 revenues of $26 billion and total assets of $115 billion. The company has approximately 33,000 employees.

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An East End resident is suing a Dallas-based insurance company for not fully paying a claim for roof damage and water damage resulting from Hurricane Ike.

Ruby Jackson filed suit in Harris County District Court on Sept. 10, alleging that the Capitol County Mutual Fire Insurance Co. has denied a portion of the claim for her house at 7314 Bastogne Rd.

She alleges the company denied the claim without adequately investigating the home.

The claim remains unpaid and Jackson has been unable to make the necessary repairs, the suit indicates.

In the suit, Jackson says the damages occurred to her property should be covered by her policy. She says that the insurance company has refused and failed to pay benefits as covered under the policy, resulting in a breach of contract. She also alleges that Capitol misrepresented that the damages were not covered under her policy and that the company failed to make an attempt to settle her claim in a fair manner, among other violations of the Texas Insurance Code.

Jackson is being represented by Jason Speights and Todd Worrich of San Antonio. She is seeking to be paid the amount of the claim plus, damages related to breach of contract, and an 18 percent annum penalty on damages as part of section 542 of Texas Insurance Code as well as prejudgment interest and attorney’s fees.

In addition, the lawsuit shows that Jackson is pursuing damages due to Capitol knowingly and intentionally committing deceptive trade practices and unfair insurance practices. The suit also says that she is entitled to additional damages as part of section 541 of the Texas Insurance Code as well as exemplary damages.

Sources:

Harris County District Court Case No. 2010-62840.

Ultimate East End Beta

Tuesday, Progressive Car Insurance stated their plans to add 175  new sales, customer service and claims jobs in Austin by the end of January as it expands its local claims and customer service operation.  Nationally, Progressive plans to 875 new hires in customer and sales.

Progressive auto insurance is the fourth-largest auto insurance company  in the nation, according. Progressive is also the fourth-largest auto insurer in Texas, with 8 percent of the market in the state, the company said.

The new positions in Austin will pay $13 to $15 per hour, said Lynley Williams, a senior recruiting manager for Progressive and the person heading up the contact center hirings.

Positions available are for people who speak both English and Spanish.  The positions in Austin will pay $30 to $15 per hour according to Progressive recruiting managers.  Candidates must have at least two years of post-secondary education or two years’ work experience in a customer service environment.

HARTFORD, Conn., Jun 27, 2010 (BUSINESS WIRE) — The 2010 Travelers Championship will generate a record-breaking amount to charity as a result of an additional commitment by Travelers (NYSE: TRV) to raise the tournament’s total 2010 charitable contribution to $1.1 million, an amount on par with the champion’s $1.08 million winnings. The announcement was made by Travelers Chairman and Chief Executive Officer Jay Fishman today during the final round of competition at the Travelers Championship.

The tournament contributes 100 percent of net proceeds to Connecticut charities, primarily benefitting its two designated charities, The Hole in the Wall Gang Camp, which serves children suffering from cancer and other serious diseases, and the Greater Hartford Jaycees Foundation, a leadership development and community service organization.

“The week has been a tremendous success, capped off by a terrific finish by champion Bubba Watson,” said Fishman. “This additional contribution is a way for Travelers to show our appreciation for the commitment and participation of the players, fans, sponsors, volunteers and countless others that made the week possible.”

The success of the 2010 Travelers Championship will allow more than 120 seriously ill children to have an extraordinary summer camp experience at The Hole in the Wall Gang Camp. It will also enable the Jaycees to help even more individuals in need throughout the community.

Additionally, the tournament offers fundraising programs that allow any charity in the state to use the tournament to raise funds. In 2010, more than 130 charitable organizations will benefit from the Travelers Championship. Travelers and its employees annually participate in Birdies for Charity, a program that collects pledges for every birdie made during the Travelers Championship, to raise additional funds for the tournament’s designated charities.

“We look forward to another successful tournament in 2011,” concluded Fishman. The 2011 Travelers Championship will be held June 20-26 at TPC River Highlands in Cromwell, Conn.

About Travelers

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has more than 30,000 employees and generated revenues of approximately $25 billion in 2009. The company provides support for charitable organizations in the community through the Travelers Foundation and with corporate funding. The company’s community giving is focused on education, community development and the arts. Travelers employees are consistently active in community initiatives and perform thousands of hours in volunteer time each year. For more information, visit http://www.travelers.com.

SOURCE: Travelers Companies, Inc.

Travelers Companies, Inc.
Jennifer Wislocki, 860-277-7458
Cell: 860-391-2605
Erin Haberman, 860-277-3617
Cell: 860-305-9130

State Regulators’ Continued Role Will Protect Consumers

WASHINGTON, D.C. (June 29, 2010) — The National Association of Insurance Commissioners (NAIC) thanked the House and Senate financial reform conferees for largely preserving the critical role of state insurance regulators in protecting consumers and ensuring the viability of the insurance industry.

Throughout the debate on the financial regulatory reform legislation, state insurance regulators emphasized the myriad problems that upset the banking and securities sectors during the recent economic crisis were largely absent in the insurance sector.

“Quick and decisive action by state insurance regulators worked to head off such concerns and ensure that insurance consumers were fully protected,” said Jane L. Cline, NAIC President and West Virginia Insurance Commissioner. “We commend the conferees for recognizing this important distinction and for preserving the key role of state insurance regulators in the nation’s financial markets.”

Cline highlighted several provisions of the legislation that are of particular importance to state insurance regulators. “We were pleased to see that the Federal Insurance Office (FIO) set up under the bill is narrowly designed to carry out its mission while not unnecessarily undermining strong state regulation,” she said. “In similar fashion, the addition of a state insurance regulator to the Financial Stability Oversight Council (FSOC) created by this legislation will add an important safeguard for consumers and provide an early warning system for other financial regulators if an insurance company were to become subject to systemic risk.”

“The package provides senior investment protection grants for annuity suitability, an area where the NAIC and the states have a solid track record,” continued Cline. “The bill also provides important clarification in regulatory authority for indexed annuities, ensuring that these guaranteed products are under the clear authority of state insurance regulators.”

The measure also makes clear that state insurance regulators will continue to have the ability to “wall off” insurance companies from troubled holding companies, protecting insurance policyholders from other risks in the financial system. State regulators, with boots on the ground across the country, will also continue to police consumer protections in the insurance sector.
The final measure awaits approval from both the House and Senate.

About the NAIC

Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more information, visit www.naic.org.