Every year, thousands of people are hurt by buying insurance policies from illegitimate or fake insurance companies—companies that look and sound like legitimate ones but, in reality, are unlicensed entities attempting to sell worthless policies and health plans. Fake insurance companies defraud the public by collecting premiums, without providing insurance coverage or actually paying claims. In many cases, a fake insurance company will provide consumers with documents that look real.  In some instances, these policies may even be represented by legitimate insurance agents who themselves have been misled by fraudulent companies. 

The facts are alarming: in the area of health insurance alone, the General Accounting Office identified 144 fake insurers nationwide that sold bogus health insurance to more than 200,000 policyholders between the years 2000-2002, resulting in more than $252 million in unpaid claims. Similarly, there are many fake companies selling auto, homeowners, renters, life, disability, prescription drug and long-term care policies.

How can consumers protect themselves against these scams?  It’s easy!

• Before signing an application for an insurance policy or writing a check to an insurance company, consumers should stop and take the time to confirm that the company they are about to do business with is legitimate. Their state insurance department, the Department of Insurance, Securities and Banking—easily reached by phone at (202) 727-8000 or the website at disb.dc.gov can quickly verify whether an insurance company exists and is authorized to sell insurance in the District of Columbia. There are no exceptions. Every legitimate company must be licensed! 

Consumers should be on the lookout for the following warning signs, as they may indicate that an insurance company is fake:

• If an agent or broker is very aggressive and pressures a consumer by saying they must sign up for a policy right away (sometimes adding…or the premiums will go up).
• The premiums from one company are a lot lower (more than 15-20 percent less) than other companies’ comparable coverage.
• When consumers try to call the insurer to get more details or ask a question, they can’t find a listed phone number, or it is very difficult to get through on the phone.

While all consumers are at risk of being defrauded, fake insurers often target the following groups: senior citizens, who may be more prone to take them at their word; small businesses that are looking for ways to save money on health and other insurance plans they offer their employees; and young people, who often don’t know a lot about insurance issues or companies. 

So remember, it’s easy for consumers to protect themselves and their financial assets from insurance con artists. All they need to do is:

STOP before writing a check to an insurer

CALL DISB at (202) 728-8000.

CONFIRM that the company is legitimate and authorized to sell insurance in the District of Columbia. 

To file a complaint or to receive free information on consumer issues, visit DISB’s website at disb.dc.gov or call (202) 727-8000.