Michigan Officials Seek to Force Broker to Remit $1.3M Owed to Insurers

Michigan insurance officials have gone to court to force a Troy insurance broker to remit $1.3 million in premiums he owes to multiple insurance companies.

The Office of Financial and Insurance Regulation (OFIR) has petitioned the Ingham County Circuit Court to compel Alternative Insurance Services (AIS) and its owner John Flaherty to abide by a payment plan.

Flaherty has previously agreed to pay restitution of $1,329,086 to 18 insurers and surplus lines general agents. He also agreed to submit a repayment schedule and quarterly reports to OFIR with a $100 per day fine if he failed to do so.

But state officials say he has not complied with any terms of the consent order.

In 2008, OFIR determined that Flaherty misappropriated more than $1.3 million in premium funds for his own personal use. OFIR revoked AIS’ license and ordered the agency to cease in desist from the sale of insurance in Michigan.

“Not only did Mr. Flaherty misappropriate premiums, but he violated the consent order by failing to repay what he took,” OFIR Commissioner Ken Ross said.

Flaherty has been accused of pocketing premiums paid to him by customers and several excess surplus lines agencies rather than turning those premiums over to the insurers on the accounts. Court records show AIG is owed more than $450,000 for various commercial and municipal accounts including ones for the cities of Inkster and Flint, the county of Macomb and the state’s AFL-CIO.

Among the 18 insurers court records show Flaherty owes are Chubb, ACE, Axa, Berkley Specialty, Markel and Philadelphia.

Flaherty’s firm web site and phone are not in operation.

Topics Carriers Agencies Michigan