Don't Fall Prey to Phony Insurance

Check with us...before you send a check to them!

They're out there. Lurking. Watching. Waiting for the right opportunity to take your money and run. Before you purchase health insurance for your employees or your business, make sure the insurance company you're dealing with is legitimate. Also, check the agent's credentials to ensure he or she is licensed to sell insurance in Texas. A scam artist may act without a license or use fictitious documents to appear legitimate. Let us provide you with the information you need to make the right decision. Because remember... they're out there just waiting for you to take the wrong step.

Make sure you know what's waiting for you
before you end up in a bad place.

In 2002-2003, the Texas Department of Insurance shut down 51 agents and 10 companies for selling unauthorized insurance. There are currently 376 open investigations against suspected unauthorized insurance scams in Texas.

Searching for affordable health insurance can be a frightening task.

Don't blindly follow an agent...Businesses, school districts and individuals are bilked out of thousands of dollars each year by scam artists who misrepresent themselves as insurance agents. But did you know you run the risk of purchasing a phony policy even if you work with a legitimate agent? At times, even experienced agents can unknowingly sell insurance from an illegal provider. Though honest agents will do their level best to avoid such circumstances, it can still happen. Worst of all, you could be on the hook for a wide range of costs and expenses that you though your insurance was covering.

How they trick you...The typical health insurance scam moves fast. "Agents" flood the market to help generate as many quick sales as possible. Often, payments will be requested up front to help ensure they get as much money as possible before they disappear. After the "agents" have reached their goal, they simply sit back and watch the monthly payments roll in. Then, just as quickly as they appeared,they disappear only to re-emerge later with a new name and a new scam. The individual or company or school district may never know they've been duped until, after thousands of dollars in premiums, they try and file a claim.

Watch for the red flags...It's important to know what to look for. Here are some of the most common signs that an insurance provider may be a phony.

• They claim low rates, or offer minimal or no underwriting.
• The health plan will accept almost anyone, including those with pre-existing or serious illnesses.
• The plan claims to be federal, not state regulated. (ERISA or Union plans, for example)
• Sales pitches that avoid the word "insurance" or the use of certain insurance terminology even though it operates like insurance. For instance, it pays "consultant fees" instead of commissions, or refers to premiums as "contributions."
• The product claims to be "fully funded," "fully insured," or "reinsured" but agents are not told the name of the carrier insuring or underwriting the product.

Don't always trust your instincts. The path may seem clear and the choice easy, but in an effort to save money, there may be some things that aren't clearly visible at first glance. So how do you know? Check out each provider you deal with. It only takes a little time, but the extra effort could possibly save you headache, heartache, and thousands of dollars down the road.

Remember, check with us...
before you send a check to them!

More to Read   Unauthorized Plans • Unauthorized Health Care
Alert to   Insurance Agents • Insurance Companies

For more information contact: PIO@tdi.state.tx.us