Verify Before You Sell

[Crabcake Johnny]

Having received a call from an agent who's client has threated legal action over the sale of an AIM product I thought this statement from the FL DOI was relevant.

What I've been hearing is "I can't see how I'm responsible since I myself was duped." This explains an agent's liability for selling any product that turns out to be bogus:

Verify Before You Sell!

"As an insurance professional you are responsible for conducting necessary due diligence to avoid putting your clients at risk. The excuses, “I thought it was legitimate” and “I was fooled and am also a victim,” are not acceptable defenses. When verifying an insurance company’s license or whether an investment is registered, make sure that you have the correct and complete name as some scams will use names similar to licensed companies and registered investments to create confusion. Don’t do it; do not allow yourself to become another victim. Verify before you sell!"

The bottom line is if you're selling any product - especially these min-meds - that later turn out to be bogus you are risking your license, legal liability and your E&O DOES NOT COVER the sale of illegal products.

 

[gmhopks]

Having received a call from an agent who's client has threated legal action over the sale of an AIM product I thought this statement from the FL DOI was relevant.

What I've been hearing is "I can't see how I'm responsible since I myself was duped." This explains an agent's liability for selling any product that turns out to be bogus:

Verify Before You Sell!

"As an insurance professional you are responsible for conducting necessary due diligence to avoid putting your clients at risk. The excuses, “I thought it was legitimate” and “I was fooled and am also a victim,” are not acceptable defenses. When verifying an insurance company’s license or whether an investment is registered, make sure that you have the correct and complete name as some scams will use names similar to licensed companies and registered investments to create confusion. Don’t do it; do not allow yourself to become another victim. Verify before you sell!"

The bottom line is if you're selling any product - especially these min-meds - that later turn out to be bogus you are risking your license, legal liability and your E&O DOES NOT COVER the sale of illegal products.

Thanks for this info. I am a brand new L&H agent and I appreciate you sharing this with everyone on the forum.

 

[Dave020]

There was one out this way a few years ago, Employer Benefit Trust or something like that. Totally bogus. Same thing, agents cried that they were victims, too. Insurance regulators said no, you are a guilty party in the transaction.

 

[somarco]

You may be thinking of Employers Mutual

Here is a walk down memory lane for those interested in the history of bogus health plans.

Focus On Health Care Fraud

 

[Crabcake Johnny]

And by the way, your MGA stating that the product is legitimate isn't good enough. You need to go to your state's insurance department to not only make sure the carrier is licensed but also that the product is properly filed.

A huge warning sign is when you're being told that a product doesn't need to be filed in your state. All insurance products must be filed in each state for which they're sold.

In the cases of bogus mini meds, they will sometimes use (steal) the name of a legitimate carrier, however when you check to see whether or not that carrier's mini med is actually filed in your state, that's when you'll see if it's bogus or not.

 

[somarco]

Here is an update on someone I have known for 20 years. Didn't realize he was out of jail.

 

[YouGotMyMoney]

Here is an update on someone I have known for 20 years. Didn't realize he was out of jail.

You weren't invited to the welcome home party?

 

[somarco]

Nope. He didn't send me plane fare. Not sure I would have gone any way.

Because of him I had to spend $20k to defend a frivolous lawsuit.

 

[Dave020]

You may be thinking of Employers Mutual

Here is a walk down memory lane for those interested in the history of bogus health plans.

Focus On Health Care Fraud

That's the one, thanks Bob!

 

[xrac]

Here is another word of advice on this subject. Don't trust your supervisor/manager if they tell you that a product is o.k. because they have done the due diligence. Do your own due diligence.

A few years ago the investment office that I was working for got into a selling interests in a Mexican resort deal outside of our broker dealer. To me this seemed wrong in two ways. First, we were selling unregistered securities and second, we were selling away on our BD. Both are FINRA violations.

When I expressed my concerns to our supervising securities (think FINRA) person he said he had done the due diligence and everything was kosher. However, I refused to sell any of the partnerships. Jump forward 7 years. Guess who now has had to surrender his license to FINRA, has been fined, and is facing further FINRA action plus civil lawsuits.