Spring 2007

Red Flags for Premium Fraud

Premium fraud is the knowing or intentional misrepresentation of information necessary to determine a business’s actual risk exposure. If you see two or more of these red flags on a Texas Mutual^® account, notify us immediately.

1. Inconsistencies with prior policies. Past insurance policies indicate significantly more payroll or premium than the insured is currently reporting.
2. Hidden ownership. The insured lists common owners on applications for other carriers or lines of insurance. The officers, shareholders or control people are different from those listed on the workers’ comp application.
3. New business. The insured is a new business with significant payroll or multiple-state exposure.
4. Certificates of insurance. The number of certificates of insurance you are asked to issue exceeds the number usually anticipated for a business of that size and type.
5. Misinformation. Incorrect information is shown on the application about the number of employees, their duties, location of operations or the number of entities included for coverage.
6. Business location. Multiple businesses are shown at the same address, the location visited is the same as previously visited for a different risk, or the business logo is not present at the location.
7. Non-cooperation. Insured refuses or delays access to appropriate personnel. Insured refuses to provide records, documents or files for audits or claim adjusting. Records are located somewhere other than the principal place of business.
8. Business operations. Requested coverages are inconsistent with the type of work being performed. Marketing material or business name are inconsistent with operation. Company letterhead allows author to choose employer. Certificates or licenses for operations reflect a name other than that of the insured.
9. Safety. Employer is not concerned with employee safety, even though there is a high rate of loss.
10. Claim reporting. Insured fails to report claims, or number and type of claims reported are inconsistent with payroll and classification information.

MUTUAL INTERESTS - Spring 2007
Your Role in Fighting Premium Fraud
Red Flags for Premium Fraud
Subcontractors Leverage Purchasing Power
Purchasing Group News
Ken's Corner
Learn How to Increase Your Sales
Earn 3.5 CE Credits

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