Application Fraud?

[insurance_guy]

I recently lost an account to a broker whose proposal was based on combining a BOP policy with the contents limit reduced to a bare minimum to obtain a "cheap" GL and Umbrella. A property floater from a well-known company was supposed to cover the actual property exposure.
I advised the client that, because the BOP premium is based on the property limit, they were being advised to use a fraudulent representation to obtain a lower premium. At the very least, the company would have grounds to deny coverage in the event of a claim. Client simply replied that other broker assured her the deal had underwriting approval. What I want to know, is how common is this practice and are there companies who are inclined to "wink" at this sort of thing? I know the companies I deal with are very concerned with insurance to value, and would send notice immediately upon inspecting the risk.

[Big Dog]

What type of business was this insured? If it's truely one that's eligible for a BOP, then this might be legit. If the insured's operations don't fall within what's eligible for a BOP, then both the insured and agent are in for some big surprises.

I've seen this combination done, using both a BOP and property floater (where the insured's contents are transitory, as in the case of a photography studio). Is it legal? Yes. Is it the best way to provide coverage? Maybe.

[CATHIEA]

I think you're confusing legality with ethics. As long as the insured is covered to the extent that they will be made whole at the time of a loss it's perfectly fine to do this. Is it dangerous? Probably. Is it more hassle in the event of a claim? You bet....

[d's insurance store]

You know, after 24 years in the biz, I've finally learned to just let this type of stuff roll off my back.

I used to be outraged that some less than scrupulous agent/broker would do something underhanded to steal business from my book. Lower rates or better coverage I could understand, but sneakiness and borderline ethics really got my goat. I don't even want to know how much stomach acid flowed because of these occurances.

I guess age has mellowed me. Dinner is on the table whether or not I keep a single client or not, so the financial impact has been minimal. If I really want to sound holier than thou, then I think that if being less than honest and forthcoming is the only way to remain in the insurance business, then I'd better get out.

Sometimes I get this kind of lost customer back, most of the time I don't. But I realize that we all define our own ethical boundries and hopefully there are enough potential clients to fund our ventures so we don't go hungry.

[sanddog1]

Correct me if I'm wrong, but some carriers offer BOP with no-coinsurance requirement. 100% automatic, this also means you can buy any amount of BPP you want and thats your limit.
I agree with guys very low ball and yes I have seen all ( I think

[mccluney]

d's insurance store says it all. When any application is submitted and a loss occurs. You better believe that the insurance company will carefully
review the application. Fraudulent statements knowingly made can have all kinds of repercussions for the agent as well as the client. I do not know of any company that does not want property values insured to value.

I for one would not take any actions that could possibly jeopardize my client or me. Loss or suspension of ins license and e&o exposure which would not be covered due to fraud committed by the agent.

I too prefer to take the ethically high road. Do you really want to deal with clients who do not?