Florida, Appointment Fraud, and AgentSync

Insurance carrier appointments can get costly when you stack them together, something that makes functions like Just-In-Time appointments appealing. So, why would an insurance carrier appoint producers that haven’t even asked for it?

The question is a head-scratcher, but it’s raised by a November bulletin from Florida, which noted producers should periodically review appointments and be sure they’re only appointed with appropriate carriers.

“The Department is continuing to receive an increasing number of reports from licensees that their license has been appointed to insurers without their knowledge or consent,” the bulletin read.

Why would an insurance carrier appoint an agent without the agent’s consent?

The bulletin doesn’t speak directly into the “why,” so we’re entering the realm of speculation, here, but if you’ll allow us a few moments of speculation, we can see some reasons this mis-appointment fiasco persists:

Pre-emptive appointments

While Just-In-Time (JIT) appointments are designed to let carriers wait until they know an agent will write business with them to appoint, most insurance carriers are conditioned with the opposite mindset. The timeline of a JIT appointment is tight, and hard to keep up with if you aren’t using comprehensive tech tools (like AgentSync, in case you didn’t see that coming). So carriers operating with legacy tech often are coached by their legal teams to take a pre-emptive approach to appointments, and appoint agents well in advance of writing business. 

This means agents that explore a relationship with a carrier, possibly even via an agency, may simply be accidentally appointed before they actually entered an agreement:

“In a few cases, the appointments were made after the agent discussed possible association with an agency or other entity, but later chose not to contract with or be associated with them,” the Florida Department of Financial Services news release said.

Inflated numbers

If only “some” of the inappropriate appointments were accidental, overeager appointments made in good faith, then others may have a slightly more intentional motivation. Among the motivations may be that, by appointing more licensees to an area, an insurance carrier can boast a more robust workforce, higher agent count, or more widespread regional coverage than the competition. 

Identity theft and insurance fraud

Unfortunately, a good portion of mistaken appointments may also be connected to those hoping to fraudulently present themselves as insurance agents, collect commissions, and disappear.

We’re not leveling baseless accusations here; the Florida Department of Financial Services confirmed in their bulletin that, in some cases, a business entity was in fact writing insurance business using an appointment and license for a person who had no idea it was happening.

How can an insurer mistakenly appoint an agent?

Florida explained, “Anyone can appoint a licensee if they know only the information from our Licensee Search page on the internet.”

So, anyone who is willing to pay appointment fees can appoint someone pretty much by looking up their information on Florida’s search and then plugging it into an appointment application.

Again, as we stated, the most likely scenario tends to be that an agent is exploring a relationship with an agency or business entity that prematurely signals its contracted carriers to appoint the agent, and then the agent and business entity decide not to pursue a relationship. If the carrier has already pre-emptively appointed the agent, then the carrier may not realize the mistake – after all, their relationship is primarily with the agency, not the agent themselves.

Why are mistaken appointments a problem for agents?

Mistaken appointments are pretty obviously an issue for carriers because they pay fees and agree to compliance oversight risks for agents they don’t actually have a relationship with. That’s risky and a waste of money!

If you’re an insurance agent, however, there are risks as well. The biggest risk for insurance agents by far is what the Florida Department of Financial Services pointed out in its release – that other people are writing business using your license. Some of the follow-on risks from the obvious:

• Short term: If a carrier is paying commissions to someone else using your license, your legitimate commissions may mistakenly be paid to someone else.
• Mid term: Someone committing fraud by using your license is likely not scrupulous about doing what is in the interest of the consumers they’re selling to.
• Mid term: Occasionally carriers and agencies are selective about working with agents who have previous appointments or contracts that haven’t been fully dissolved. A fraudulent appointment or mistaken agency affiliation could disqualify you from the appointments and affiliations you want.
• Long term: State departments of insurance don’t have the ability to resolve civil contract disputes. If a carrier or agency were to dispute a contract you believe was fraudulently entered into, you may have to take it to civil court to have yourself removed from the agreement.
• Long term: Once license abuse is discovered, you could have headline risk – an internet search of your name could yield a lot of court action and discipline records. Even though you’re the victim of this fraud, potential clients may not read past the headlines.

What can you do to prevent or check insurance appointment mistakes?

Florida noted you can run a Licensee Search on your name to verify your Florida appointments. Of course, if you’re working across states, it could be time-consuming to search state by state – we have to doubt that this is an issue limited to Florida.

The department also noted, “we have no way to monitor appointments or otherwise ‘flag’ an agent’s license to reject an appointment or monitor appointments when asked to do so by a licensee.”

So, from a state perspective, the best you can do is look out for yourself and spot-check. However, from the AgentSync perspective, your carrier and agency relationships may help you on this one.

With AgentSync Manage, carriers, MGAs, and agencies can give agents their own portal that pulls in the agents’ personal insurance appointment data for all states. Using one of these portals, you can verify your appointments are current and correct for all states in one search. No repetitive searching across states. No nail-biting. Know what the National Insurance Producer Registry has down for your records at any given time, full stop.

The Florida Department of Financial Services asks that anyone with mistaken appointments report them to the state using AskDFS@MyFloridaCFO.com so regulators can verify whether the appointment was made in error, or whether there is some degree of fraud involved.

To find out what else AgentSync Manage can do to maintain the integrity of the insurance distribution chain – even during periods of crazy-beans, mind-numbing growth – check us out.