Fraud is the most critical challenge facing premium finance companies today. You probably have some, or many, fraudulent receivables on your books today; you just haven't uncovered it yet. Hopefully it is not a large amount. The fraud can arise in a myriad of ways:

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• Agents 

  • Financing policies which the insured has paid in full

  • Creation of finance agreements financing phantom insurance policies

  • Failing to submit premiums to the insurance carrier

  • Financing the same insurance policy with multiple finance companies

  • Financing an actual insurance policy but with the incorrect premium

  • Improperly including agent fees in the financed premium

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• Brokers/ Wholesalers

  • Selling phantom insurance policies

  • ​Failure to remit premiums to the MGA/ Insurance Carrier

  • Improperly representing themselves to be appointed by the carrier

  • Selling coverage for which they have no carrier authorization

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• Employees

  • misappropriating customer payments

  • misappropriating insurance company refunds

  • creation of phantom vendors

  • working in conjunction with agents to change accounts and misappropriate funds

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Even if you have the appropriate underwriting and approval procedures in place, it is critical that there is a comprehensive set of Audit Procedures and Exception Reporting in place to detect any areas of concern and red flags. If there is a "hole" in your system, be assured that agents / insureds will eventually find it.

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• Do you determine if multiple accounts are utilizing the same address?

• Do the addresses of insureds referred from certain agencies contain a high percentage of PO Boxes

• Are agents paying a high proportion of customer installments directly from the agent's bank account?

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These procedures are just a small sample of the procedures that you need to have in place to ensure that any "unusual" situations are detected quickly, minimizing losses 

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At PremiumFinance.Consulting we can review your current fraud prevention and detection procedures to determine if they are rigorous enough in today's world where financial related fraud is pervasive