Toops Scoops: Does the Independent Agency System Attract Criminals?

Wow, how's that for an inflammatory headline! 

And no, I'm not just going for shock value. The thought has been in my mind recently after receiving a lengthy listing from the Illinois Insurance Department on independent agents in our state being fined, having their licenses pulled, or being denied licenses. And not for stuff like being out of trust, either. We're talking for the most part about people with preexisting criminal records — ranging from child support deadbeats, DUI slugs, drug dealers, child pornography convicts, even a murderer. 

Here's a sampling: 

Jerome F. Johnson, Chicago – Application for insurance producer license denied, effective May 17, 2010. Mr. Johnson's application for a license to sell life, accident and health insurance was denied as a result of an investigation which revealed that the Applicant was convicted of felony Murder on January 27, 1971, and failed to provide documentation with his application effective June 9, 2010.

Timothy A. Rasey, Hoffman Estates – Application for insurance producer license denied. Mr. Rasey's application for a license to sell life, accident, and health insurance was denied as a result of an investigation which revealed that the Applicant was convicted of felony Child Pornography on December 17, 1998.

Michael J. Smith, Chicago — Mr. Smith was licensed to sell life, accident, and health insurance. His license was revoked as a result of an investigation which revealed that he was convicted of six counts of felony Unlawful Distribution of a Controlled Substance on January 29, 2003. – Insurance producer license revoked effective May 28, 2010.

Of course, everyone has the right to go straight and make an honest living after serving time, but then there are the others who are still at it:

Jason A. McKay, Bolingbrook – Mr. McKay was licensed to sell life, accident, and health insurance since January 18, 2008. Mr. McKay's license was revoked as a result of an investigation which revealed that he: created a fraudulent group in order to obtain cheaper premiums; offered to rebate premiums for three consumers; improperly withheld premiums; and submitted insurance documents to an insurer that contained non-genuine signatures. The revocation also includes $25,000 civil penalty and $23,616 in restitution. - Insurance producer license revoked effective May 27, 2010.

I admit there's  probably something in Lake Michigan water that predisposes so many of its residents to the left-hand path. Besides the tiresome example of Al Capone (who's been dead for more than 60 years but seems to generate just as much press posthumously as when he was alive), we have the dubious distinction of having roughly 20 percent of our governors indicted on felony charges. (Late, great Chicago journalist Mike Royko once suggested that the Illinois state motto should be, “Will the defendant please rise.”) 

But with the economy showing signs of slipping backward instead of improving, I'm certain that the Land o' Lincoln doesn't have the market cornered on corruption. Independent agents handle money, sometimes lots of it, and in the immortal words of prolific '30s bank robber Willie Sutton, when asked why he robbed banks:” Because that's where the money is.”

A career as an independent insurance agent is attractive to the legit — and with its entrepreneurial flavor and access to the pocketbooks of both corporate and private America, probably equally attractive to the felonious.

In a blog post here earlier this year, we reported figures from the Coalition Against Insurance Fraud (CAIF) showing that state fraud bureaus were not only seeing an increase in insurance fraud, but in fraud being perpetrated by agents. Just as there are hinky accountants, doctors and lawyers, a job as an insurance agent is sure to attract the unscrupulous. And with no end of tough economic times in sight, you can be sure you'll be hearing more about this in the future.