Course 1

Introduction to

Association Selling

Chapter 1

Introduction To Association Selling

 

What You Don’t Know Can Hurt You

 

If you’ve been a licensed insurance Agent or Broker (there is a difference between the two), then you probably think you know a quite a bit about associations, selling insurance programs, and other material sold through associations. At least most think they do. But, as you will see, that’s part of the problem.

Each year, thousands of Agents and Brokers are deceived into marketing bogus health plans, bogus insurance, bogus associations and other programs. They don’t know what they thought they knew. Here’s what usually goes wrong:

Too many brokers have only a little knowledge regarding insurance and selling within an association. We all know where that gets us. It’s into trouble. Each year Agents and Brokers get into trouble and that includes getting fined, administrative sanctions, or having to pay claims because their Errors and Omissions Insurance doesn’t pay when you sell bogus insurance and there are claims to pay.

 

Why Does This Happen?

 

Association selling attracts scam artists just as any other industry because there’s money involved. Since there are always plenty of Agents and Brokers who think they know what they’re doing (and a lot of duped customers), the scam artists often get a free pass. At least they do for a while.

Each year a number of unauthorized, unlicensed, and improperly marketed programs are closed down. Some who promote and sell them, escape for a while but eventually they’re caught, fined, and some are imprisoned. How would we know that? We’ve gone through it and had to personally provide a defense because others scammed someone and dragged many unsuspecting people into their scam. Unfortunately, that happens only after many consumers, Agents, or Brokers are damaged with unpaid claims, fines, loss of license or have administrative penalties placed against them. But, it doesn’t have to be that way.

 

First Example

 

Let’s use some real life examples to illustrate what’s happened in the past. About 2003, hundreds of Agents and Brokers were sued in federal court in Reno, Nevada. The case lasted a few years. The reason for the case was that someone promoted bogus insurance and used illegitimate associations to promote and appear to back the program. Many were duped into promoting the bogus insurance and even states, Third Party Administrators, and others were drawn into the scam. Here’s how it ended.

Some Agents and Brokers were sued while others had state and federal government actions brought against them by regulators. Lawsuits ranged from a few thousand dollars to several million dollars…each! Most, if not all, had to pay something. Some paid dearly because. in one instance, several Brokers were charged with having to pay in excess of $10 million in claims. Here’s how it ended. When all was said and done, the attorneys made out like bandits, three of the Brokers died due to stress, and the rest lost time, income, reputations, and a lot more. But, how could it possibly happen?

The “associations” and “insurance” that was represented, turned out to be absolutely bogus. Paperwork was forged, false information given out and there was a even a bogus parent company. Included in this complete scam were bogus insurance plans, and there were a number of bogus associations…all with no insurance behind the plans.

As you might have suspected, no claims were paid. Brokers had to endure a lengthy court battle which cost time, energy, stress, and money. As it ended up, the government set up a Receiver who had an attorney and both came with a judge who wanted Agents and Brokers to pay for unpaid claims. In other words, they wanted “blood” and they wanted it from those Agents and Brokers who’d participated (even unknowingly) in this scam. When all was said and done, all wished they’d never heard of the insurance or the organization.

When the dust settled, the scam artist in charge of the organization received a prison sentence of 26 years! His name was James Lee Graf. One of his deceived accomplices died of a stress related heart attack while two others received lesser sentences. Many Agents were damaged and had to learn a good lesson.

 

The lesson Is…

What you don’t know can hurt you. While most participants were damaged in the lawsuit mentioned above, some weren’t. Why? They’d bothered to check with their state’s department of insurance regulation, worked with a Fraud Investigator and when all was said and done, they didn’t pay one red cent! They didn’t have to admit to any wrong doing (because they didn’t do anything wrong), and they were basically free to go! While others had a more difficult time, these Brokers did it the correctly and saved their money and their careers. One of them still works with the Association today. That person is me.

 

Second Example

There’s a second example. Another scam occurred and it was discovered that an organization had masqueraded about as an association. It turned out to be an unincorporated entity, not a licensed agency and certainly not a corporation as it presented itself. It turned out not to be an association either. Those who operated it, created bogus carriers and health plans to sell to their “members”. There was also a bogus Third Party Administrator which wasn’t incorporated, wasn’t licensed, but it billed and collected insurance premiums. The feds got wind of this scheme. Need I say more?

 

Lessons Learned

As a licensed individual, it’s important to identify and prove up. Prove up what? You need to prove that there is an actual, bona fide insurance carrier, that the health plan filings in various states have occurred, and that states have authorized the program. Do that first and minimize our potential troubles. When Agents and Brokers didn’t do this, they were duped.

By now, you’d think that some would learn from the mistakes of others. Nope. There have been other organizations that promoted themselves as legitimate when they weren’t. Eventually, there’s always yet another organization followed by the selling of bogus insurance and that scam seems to go on and on.

Just because you aren’t caught immediately, doesn’t mean that you won’t have to pay for your crimes against others. While the jury’s still out on many who’ve participated in scams, you can be certain that the Agents and Brokers won’t escape. When the claims are calculated, someone will pay and someone will lose a license or be fined or both.

 

Third Example

In a third incident happened less than 10 years. The scam was to use a “union plan” under the guise that it was legal, viable, and ethical in every state. The perpetrator was a man named Dave. Dave claimed to be the president of the union and previously he’d promoted a bogus association. Dave said he had an insurance plan which was the perfect plan design and at the lowest price around. That was only a half truth (if that).

At first, all Dave had to do was deceive one Broker. That man’s name was Gordon and it was Gordon who became the person that would override everybody else in the organization so he recruited far and wide. Gordon saw the dollar signs. Once he was fooled, Gordon went out and recruited so many others that there became a sizeable sales force. That meant big commissions. The promise of big bucks clouds judgment. Soon, everyone was happy to make big bucks like Gordon and sell the program.

In the process of time, Dave traveled and met with Gordon and the new recruited Agents and Brokers. He knew that making an appearance would give him credibility. So, Dave met with Gordon and others and told them all about his bogus program. He said that his insurance plan had no claims or complaints against it in the host state.

Here’s how that played out. Because Dave said that his program had no complaints against it, Agents and Brokers phoned the state department of insurance. Of course there were no complaints because the program really never existed! But, the person on the other end of the phone didn’t know that. So they’d verify that the program had no complaints against it. That gave Dave even more credibility. Of course Dave knew all along that the no department of insurance would have any record of the plan so if anyone asked, they’d always be told, “No, we have no complaints or claims against that entity.” Agents and Brokers phoned the department of insurance and were told exactly what Dave had presented. As a result, he gained instant credibility. But, it got better than that.

Dave also knew that the Department of Insurance was so disorganized, that he could get away with his plan long enough to make millions of dollars and that’s exactly what happened. Dave made millions. He was eventually caught but, without an insurance license, all he got was to be arrested, bonded out, and he had to pay a fine of $180,000 or so. In the process, Dave also got to keep the rest of the money! Without a license, there are only certain things which can be done to people like Dave. In the end, Dave went to another state and started another scam. Since Dave had no license, the Agents and Brokers were left holding the bag. They got stuck with fines, paying the claims, losing their licenses, declaring bankruptcy, and some lost everything they owned. Gordon lost everything. His bankruptcy hearing was well advertised to all of the Brokers he’d brought into the program. See how this works?

 

What Scams Have In Common

Scams have some things in common. Let’s review them so that you can begin to logically create a mental check list. In doing so, you’ll be more difficult to fool in the future. So what did we learn from these examples? Plenty!

1. Agents and Brokers. Brokers are “used” by the scammers to promote and sell the unauthorized insurance to the general public. Sometimes Brokers believe the scammers if they tell them what they want to hear. Having a low cost insurance usually attracts people.

2. States go after Agents and Brokers. You have a license. It signifies both a state granted privilege as well as oversight and control over it. Therefore, the State goes after Agents and Brokers more severely than it does an unlicensed entity or individual. Scam artists usually aren’t licensed. They know better.

3. Things often aren’t what they seem. Bogus programs include low prices, plan designs, great features, legal looking paperwork, a fancy website, an office building, legitimate sounding names, and more. Always check with your Department of Insurance first. Most scams seem plausible and legitimate.

4. Scam artists go the extra mile. As a result, scam artists are willing to travel, hold tele-seminars, Webinars, and tell you whatever it takes to get you on board. They know your hot buttons. They’ll promote with fancy brochures, websites, and create nice fulfillment packages that make everything look “real”.

5. Brokers fall for big bucks. Often it’s the promise of big commissions and/or having a plan which is so under priced, that you could sell it to anyone. It’s the money that blinds many to looking deeper into what they’re representing.

6. There is no real insurance. In some instances, there is the appearance of insurance but no real insurance to cover the claims. There might be insurance logos, paperwork, policies, etc. They could be forged or “borrowed”. Other scams begin with insurance at first but drop it and begin to keep all the money internally. That’s when all the fun starts. Then, claims are paid out of the pocket of the guy collecting the premiums. Agents and Brokers find out that they can’t reach anyone at “the company”, and neither can their customers. When you can’t get through to anyone, your customers go to the Department of Insurance instead.

7. Claims. Most scams don’t pay claims or they only pay them at the beginning. They do that in order to get the program rolling. But what if claims aren’t paid? When that happens, states go after you and make you (or your Errors and Omissions Insurance) pay claims. If the E and O won’t pay, you will. Claims are a catalyst in causing states to go after you. If you have E and O Insurance, you aren’t immune to state of federal prosecution. You’re just a bigger target.

8. Most scams are spread because just one person is duped. Don’t take anyone’s word for it. Ask all sorts of questions, demand strict proof, call the carrier, go and find the answers if you think a program is bogus. Become the “pain in the butt” if you have to. Contact your state’s department of insurance.

9. If it’s “too good to be true” often is. Scams promise what’s  “too good to be true”. Many fall for them because they don’t check or use common sense.

10. Scams throw around the right names. If you hear names of carriers and organizations, go research them. If you hear names of individuals who promote the programs, including the Broker in charge, go research them too. If you hear famous names, see if they’re actually affiliated with the program. Find out who “the players” really are. Who’s pulling the strings? Have any of them been convicted? Go find out.

 

The Association’s Proactive Approach

Over the years, the Association For Independent Managers, Inc.™ has developed a proactive approach to association based selling. As a result, the Association created its own viable program.

 

What’s the program?

 

The program involves the following three pronged approach to educating you so that you won’t repeat the mistakes of others.

Prong #1: Education such as this course. Education is a powerful tool in helping you become and remain more successful. It can help you stay out of trouble—especially when you know what to look out for. If you’re educated, you are less likely to make mistakes or be fooled.

Prong #2: Periodic compliance updates regarding what’s legal, new statutes, etc. This is ongoing and it needs to be. Statutes and rules change and so do compliance issues.

Prong #3: Tools and resources you can access through the Association. By making them available, you have no excuse to do it wrong and every reason to do it correctly.

 

Association’s goals for you

The Association wants you to be successful, make a lot of money, bring in a lot of members, and stay out of trouble in the process. You can lessen your potential liability as when you learn to do things correctly. If it’s not good for you, it won’t be good for the Association either.

How could all of this education be accomplished? You already know the answer. It starts by offering a series of educational specifically designed courses for Agents and Brokers who represent the Association. This is the first in a series.

 

What Not To Do

One of the things that can get you into trouble is that it’s important not to make any purposeful or unknowing misrepresentations. We’re going to discuss misrepresentations quite a bit during this course. Too many of them get passed on while no one bothers to check. It’s too easy to pass on bad information.

But how would you know if you made any misrepresentations? You’d only know if you had the true facts. If you have them, then anything that doesn’t mirror them is false. It always takes accurate information and education to know the difference.

 

Don’t Do This:

1. Some believe all they have to do is properly represent the approved materials they’ve been given by “the company”. Then, everything’s going to be OK. Problem! Let’s say you are representing a bogus program. You can follow all of the written material exactly, present it to consumers, and do exactly what you were told to do. The problem is that if it’s bogus to begin with, you’re guilty of passing on bad information!

2. Some don’t read material before they present it. Result? They pass on misinformation, aren’t compliant, and they get themselves and others into needless trouble. Making false statements is serious business.

3. Some think they know all about Association selling. Guess again. It’s they who normally get themselves and others into trouble.

 

Or This:

Never become cocky. Most of us don’t believe that anyone could fool us. That’s what makes it possible for scam artists to fool us. If you think you can’t be fooled, then once you’re fooled already. As a result, you’ll just pass on bad information, thinking it’s good information. The worst thing that can happen to us is to believe false information and not know the difference. That’s dangerous.

Don’t just rely upon yourself alone. Be accountable to someone. Don’t just rely upon what someone tells you either. Check it out. If you trust someone, realize that they could be fooled just like you can. Always obtain validated information so you can be accurate, legal, and ethical. What’s the source or the standard? It should be your state’s department of insurance.

 

A Surprising Statement Of Fact

Most Brokers and Agents misrepresent insurance and other programs from time to time. Most fail to realize they’ve made a mistake until later. What??? Are you surprised by that statement? I hope not. That statement might sound a bit strange but the fact is it’s painfully true.

Fact:  According to a number of attorneys and regulators who interface with the Association on a regular and ongoing basis, misrepresentations, both purposeful and unknowing, are found at the root of the association industry. This is especially true whenever insurance is involved.

The method used?  “Agents and Brokers”.

Agents and Brokers receive and pass along bad information. Most fail to verify anything and are easily used by the scam artists. Most believe they couldn’t be fooled while they’re being fooled.

 

What The Association Has Uncovered

More specifically, here’s what attorneys and regulators tell us:

1. Few experienced Agents and Brokers understand all there is to know about selling insurance through an association. Some make assumptions. Most don’t know the rules so they get into trouble.

2. Only a few Agents and Brokers have consulted with an association attorney, regulators, or other officials so they’ll know the answers.  Our hats are off to those who did. Of them, only a handful have interfaced with regulators from more than one state. This means that few have cross checked information and sources. Most have no attorney and no consultant to guide them.

Lack of checking up on what’s factual, ,means you don’t know what you don’t know. That’s why Brokers get themselves into trouble. They pass on what they don’t completely and thoroughly understand themselves.

 

Rumors And Bad Information:

How do rumors, bad information, misinformation, etc. get started? Often it originates from those who have something to gain by dispersing it. We refer to them as scam artists. But, how do these people operate? Let’s break it down and use the following example:

Problem: You have heard rumors, bad information, or even misinformation. Hearing it is one thing, not verifying and passing it on is another issue. If you don’t verify before you pass it on, you can get into trouble. Most, if not all, Departments of Insurance will hold Agents and Brokers accountable for what they disseminate to the general public. If someone’s damaged, you get in trouble.

Outcome: When one Broker in the state of Florida passed on bad information regarding a major medical plan (which was supposed to have union affiliation), he lost his license. He was called in to testify in an administrative hearing and then lost his license. That meant he could no longer feed his family.

Solution: Check out all information you receive and verify it. Verify what you hear.

Chapter 2

Things You Need To Know

 

Dispelling Myths

A myth is something people believe that’s not true. Some have even died while believing myths and that’s how real they can seem to others. Myths can be dispelled however when they’re held up to scrutiny. That means you hold them up to a source of factual information. Your state’s department of insurance is that source. 

Question:  With that said, what do you need to become familiar with?

Answer:  It’s the information your state offers and, with the Association, it’s information included in these courses.

Question:  Why learn the information in the Association’s Broker Training?

Answer:  Several reasons exist.

1. If you wish to stay out of trouble with customers, regulators, and carriers, you’ll need to learn how. By understanding what’s authorized and correct, versus what isn’t, you’ll have less room for error.

2. Learning about the organization you will represent, rules, regs, and correct facts which are in accordance with your state’s statutes and laws, means you are compliant and can stay out of trouble.

3. Learning about a Limited Medical Benefit Plan (which is included in some of the Association membership packages) means you know how to represent, not misrepresent it.

4. Learning what regulators want you to know means you properly fulfill your duties as a licensed Agent.

 

Start On The Right Footing

 

In order to begin on the right foot, here are some helpful points that involve your attitude and approach to life:

1. Be teachable. Be willing to drop false concepts or beliefs. If you believe something but cannot prove it, then go and prove or disprove it before you promote it further.

2. Don’t be gullible. Most will stand up for what they believe even if it’s not true.

3. Be patient. Learning takes a little time and repetition works. As a professional, you need to know this stuff anyway.

4. The Association is not being unreasonable when it offers courses and expects you to study the material. Just because other associations haven’t required that you know this material doesn’t mean that it’s not the right thing to do. In fact, as a professional, you’d expect to learn about any program prior to marketing it.

5. Realize that you must adhere to statutes and laws which might not seem “fair”, logical, or “right” when compared to what you thought you know. Once you learn them however, they begin to seem fair and logical. The law and statutes are always right to follow but you don’t need to agree with them just obey them.

15 Myths Which Have Been Spread

First myth: You can sell insurance through an association in any state if the carrier is approved there. In fact, you can sell insurance through the association even if the carrier isn’t approved in a particular state.

Fact: Both association and carrier must be approved in a given state, the plan must be approved and the association must hold a valid and up-to-date Certificate of Authority. In addition, the association should also hold the policy.

The Second myth: You are selling insurance through an association.

Fact: This myth is often promoted by Agents and Brokers but it’s a myth. You are actually selling a membership which has insurance in it but you aren’t just selling insurance. Sound too picky? Not to the regulators. They want you to speak the truth and offer accurate representations to potential members to the association.

The third myth: Billing and collecting premiums and dues can be accomplished by the association, a program manager, or even an agency.

Fact: A licensed Third Party Administrator (TPA) should bill and collect—especially when there are insurance premiums being collected. This would include a package of dues, non insurance and insurance.

Fourth myth: You can add commissions to insured products so that the brokers can get paid.

Fact: Since all insurance is filed with the states, the rates are also filed. Commissions would be included. Therefore you may not add commissions to the insurance portion of a plan. You can only add commissions to the non insurance portion when the plan is filed with a state for our purposes in this course. If DMPO offerings are included, there are limits on what can be charged. The same goes with most discount programs.

Fifth myth: If you have a Limited Benefit Plan (within a membership) and you’ve added Dental Insurance, Critical Illness, Accident Medical Expense Insurance, or other insurance to the package, they’re “riders”.

Fact: Unless the other add-on insurance is literally a “rider” of the same company’s plan, you cannot refer to it nor sell other insurance plans as “riders”. They are not “riders”, they’re separate plans or packaged plans from different carriers. Riders come from the same carrier as the core plan.

Sixth myth: You can form an association in order to sell insurance.

Fact: You may not do this. It’s not acceptable by regulators or carriers. The only way some get away with it is not to come onto the radar screen of a regulator or carrier. Once they do, the game’s over. If an association did this, they’re going to lose their insurance just as quickly as they obtained it.

Seventh myth: Affiliation agreements are OK.

Fact: Usually they’re not OK. What this means is that one organization, which couldn’t obtain insurance, goes to another association that could obtain it. The plan is to create a “contract” which would allow the second association (which is not approved or authorized) to obtain the insurance through the first. Whenever carriers find out what’s occurred, they either cancel coverage, alter it, or stop the second organization from accessing their insurance. Unless you obtain the carrier’s blessing, don’t do it.

Eighth myth: As long as the insurance is approved and filed in a state and it’s sold through the association, a Broker need not be licensed in every state where someone buys insurance from them.

Fact: A Broker always needs to be licensed in any state where they sell insurance products. There are no exceptions.

Ninth myth: Guarantee Issue means everyone’s going to be accepted.

Fact: Guarantee Issue means that a certificate of coverage will be extended IF certain qualifications are met and IF the applicant is accepted. For instance, if an individual has an incomplete application or there’s fraud or an extenuating circumstance, they won’t be extended any coverage. As a Broker representing a program, don’t make promises you can’t keep. Don’t extrapolate on the Schedule of Benefits either.

Tenth myth: Each insured gets a policy.

Fact: The association should hold the policy and insureds will receive a certificate of coverage or certificate of insurance but not a policy.

Eleventh myth: A glitzy website that makes it easy to sell a Limited Benefit Plan, is what Brokers need most.

Fact: Brokers need websites which comply with state mandates, DMPO rules and regulations, and which are also approved by the carrier, the states, and the association. If all the disclaimers and wording aren’t there, then the website is unauthorized and it’s illegal! Glitzy has nothing to do with it! If you are any kind of a sales person, the website would be immaterial.

Twelfth myth: It’s OK for an association to change carriers and plans often.

Fact: It’s more of a red flag that the organization is doing something improper. Our advice, run! It takes months or up to 1 ½ years to change some plans.

Thirteenth myth: It’s OK to send out memos and other information which isn’t verifiable, approved by carriers, the Association, and the providers, etc.

Fact: All correspondence which lists, mentions, or refers to carriers, the Association, and providers, must be approved, in writing, first. Carriers, DMPO’s, Associations and other organizations must approve all written material.

Fourteenth myth: The Association’s plan is HIPAA Compliant.

Fact: The program accepts HIPAA credit but it’s not HIPAA Compliant, which means it’ falls under the Healthcare Act passed by Congress in 2010. It doesn’t.

Fifteenth myth: In order to begin selling, all you need to know is how the Limited Benefit Plan works.

Fact: Brokers must be licensed and appointed first. Brokers must also learn about the insurance as well as the Association, the memberships, what’s included with membership and other aspects of the organization. Never just teach how to sell insurance under these circumstances.  Why? Because you’re selling memberships which contain a Limited Benefit Plan, not just Limited Benefit Plans. To give the impression that everything else is “incidental” is passing on misinformation.

How did you score on the myths and facts listed above? Hopefully you got then all correct but we know better than to expect a 100 from all Brokers.

 

Important note:

Too many companies, associations, and other organizations do not require that you learn and understand specific information regarding their programs, benefits, products, or services. There is no real accountability. As a result, several things happen. We’ll review some of them in this next section.

 

Association Agent and Broker Website

 

The Association maintains a special website for Agents and Brokers. It also offers a newsletter which is specifically for Agents and Brokers who represent the memberships (including those with the Limited Medical Benefit Plans).

The purpose of this program is to give you important information and tools you’ll need to be successful. The website includes flash presentations, course material, marketing ideas, and more.

In addition, there are other programs you may market and gain additional income.

Chapter 3

Why This Course...Really?

 

Why The Association Created This Course

Let’s review a number of reasons why this course work was created. In doing so, we’ll review some of the misgivings you might still have. It’s time to get rid of bad information. You can only replace it with good information and new material.

It took time, money, and effort to put this information into your hands. You could have spent hundreds or even thousands of dollars obtaining this information…the hard way. The Association worked with Association Attorneys, several state regulators, and some of the best consultants in the nation who helped produce this material. The best Agents and Brokers will use it wisely. That’s why it’s become part of the Association For Independent Managers, Inc.™ program for you.

 

What Happens In The Field:

Here are some things that attorneys, state regulators and consultants and insurance underwriters have told us. Since we paid for the time with some of them and value the authority of others, the Association felt it important enough to pass on this information to you:

1. Ever get blindsided?

Some brokers think they know what they’re doing even when they don’t. It’s a “confidence” thing. Some think it’s a matter of pride.

The Association has fielded calls from those who’ve marketed bogus programs where someone used the Association’s name improperly. Those who were duped, thought the Association was behind the program. In other instances, unscrupulous individuals misused an insurance carrier, it’s name, or forged documents which included the carrier’s name or logo. The result was that the Agents and Brokers blamed the carrier (or the Association) rather than themselves or those who actually committed the frauds. Why? Pride I guess.

Too many Brokers get themselves (and others) into trouble because they don’t realize what or whom they represent. Then, when they find out they’d been had, they hate to admit it. Don’t allow vanity to blindside you. Most Brokers would never admit to having been duped by anyone but those who’ve been duped in the past are more easily duped in the future. If you don’t believe this, just ask your state department of insurance regulators about repeat offenders and be sure to ask about those who’ve been duped multiple times. Attorneys, regulators, insurance companies and others can literally name names. If you’ve been duped in the past, then education (such as is a part of this course) would be a perfect way for you to stay out of trouble in the future.

 

2. Agents and Brokers have targets on their backs.

Most don’t realize it. That’s because Brokers have always been used by scam artists. Most never realized what’s going on until it’s too late to stop the damage. It was planned to be that way.

 

3. Many cause damage to customers and not realize it.

Prove up your information. Don’t continue to sell an illegal, unauthorized, and unapproved program. Customers are damaged when Agents and Brokers misrepresent information knowingly or unknowingly. When it happens, the customer gets hurt the most. State departments of insurance do not take your misrepresentations lightly. This has caused several state regulators to accuse people like you and me and demand that they pay for damages.

Example: Here’s an example from 2010. Thousands of Brokers sold Limited Benefit Plans which had NO insurance attached to them. More than one organization was involved. Some touted associations which were used to sell the insurance. That made it seem legitimate. One organization was not aware of this scam until it began to receive phone calls from those who thought they were members of the association, thought they had insurance, and now had claims. In this scam, which affected many states, many “program directors”, many associations, misrepresented carriers, etc., drew in thousands of Agents and Brokers. It didn’t stop there either. Most of their carriers didn’t exist (and the phone numbers never worked) or there were carriers which received phone calls for products they never sold. In one instance, a P and C carrier was supposed to have sold Limited Benefit Plans but that was news to the carrier.

 

4. When a broker presents (even unknowingly) what’s illegal, they place themselves in a position of having to accept liability for their actions.

Scam artists usually aren’t licensed so the regulators go after those that are. When this occurs, Errors and Omissions Insurance may have to be used but most companies won’t pay claims if there was bogus insurance. You may have to pay administrative fines and other fees out of your own pocket. You could lose your E & O as well.

Example: An example would be to promote a Limited Benefit Plan which is sponsored by an organization where the organization has no certificate of authority in a particular state. The organization may not hold the policy (if there is “real” insurance). Then you discover that neither the organization nor the insurance behind it, is recognized by your state’s insurance department. Oops!

 

5. Regulators and statutes change with time and legislation.

If you think you know the right answer, you could be wrong. The Association has created programs for its marketers in order to put timely information into your hands.

 

6. Unscrupulous individuals have gotten into the association industry.

Some are trusted and well known. Some are really convincing and could have made big bucks if they’d chosen to do it the right way…but they didn’t. In order to help combat their myths, false information, bogus programs, etc., the Association works with regulators, attorneys and compliance organizations in order to educate Brokers who work with the Association. Compliance newsletters are worth their weight in gold.

 

7. When economic times are tough, states look for revenue sources in the form of fines.

That means you need to stay out of the grey areas and not become a target. When state departments of regulation see an opportunity, they’re going to take it and you don’t have to be one of those who will be buoying up their budgets by having to pay fines.

 

8. Scam artists need time.

It takes time to put together a bogus program. It also takes time to deceive you but once they have done that and get you “on the payroll’, it’s easier to change programs, add bogus insurance, bogus associations, etc. While those are red flags, getting paid is often a greater motivator for many so they ignore the red flags. It just takes time to cook the frog when you turn up the heat slowly. Don’t get “cooked” that way.

 

9. Don’t take anyone’s word for it.

When someone tells you they have a viable carrier and health plan, most take their word of for it. That’s why bogus carrier names that “seem” OK, are sold by people just like you.

 

10. Scam artists use lower prices and what sounds too good to be true.

No one wants to rock the boat if they’re getting paid well, have something easy to sell, and people want what they’re selling. But it may not be real.

 

11. Getting paid on time and paid well can blind you.

No one wants to rock the boat and money steals our focus.

 

12. Glitzy websites will trump approved and authorized websites.

At least this is what often occurs in an Agent or Broker’s eyes most of the time. A good marketer wants legitimate information—regardless of how it’s presented. A lazy and easily fooled person looks at the cover of the book instead.

 

13. Looks can be deceiving.

Official looking paperwork, having a toll free number, a nice website, business cards, and a drug card can fool a customer more often than not.

 

14. Verify coverage.

Few will verify whether or not their state has authorized a carrier or a plan. As a result, some are deceived by the scam artists who know they’re too lazy to check out anything.

 

15. Most people need only to be fooled one time.

After that, they can be told anything and they’ll believe it. So, what do scam artists do? They deceive one MGA or one GA first. They’ll pick out one that others respect. Then those who happen to trust that MGA or GA, will go along willingly. You only have to fool someone one time before you can fool many people over and over again. It means gaining the trust of just one person.

 

Serious Business

So, by now you probably agree with us. This is serious business! At any given moment, there are those who’ve sold Limited Benefit Plans and other insurance through associations. But, did they do it correctly or not?

The law of averages tells us that at any given time, some Agents and Brokers will be doing things the right way. Some are under investigation. Some will be fined. Others will lose their licenses or face court actions against them. This need not be the case with you. This is serious business.

 

14 Actual Phone Calls

Each month, the Association receives its share of phone calls on the Customer Service hotline. Some emails are sent to the “Just Ask” program as well. Here’s what the Association has experienced. Maybe you can learn some lessons from these calls:

1. The Association routinely receives phone calls from supposed members who believed they were linked to it by insurance but in fact, were not. Their perception was caused by a fraud which was passed on to them by their Broker and or another unscrupulous organization which sold something to them. It all began when the Broker believed a scam artist and never bothered to check. There have been many who phoned in the past that believed this myth.

2. People believe they’re calling an insurance company. Some were told that they were insured by the Association as if the Association was a carrier The Association has to explain that it’s not an insurance carrier and therefore is not the Association’s health plan. Our customer service people then ask the person to verify their certificate of insurance and see which company’s name is on it. That’s the right way to contact your carrier. But, why did some believe they bought insurance or some other product from the Association when they clearly did not? How did they come to think this? The misinformation was passed on by their Agent or Broker.

3. Some think that the Association is actually another company which may use a similar name. Since they cannot reach that other company, they’ll go onto the Internet, find the Association, and then want to complain about the bad service, lack of response, etc. by the OTHER organization! Yes, we do receive some unique calls. Sorry, but our organization has been the same one for more than 30 years. You need to be crystal clear with your customers as to whom you represent and how they can reach the organization with various matters. The Association’s membership programs offer fulfillment packages (3 types) in order to make certain that everyone has the right phone numbers, internet websites, etc.

4. Some who called in, believed that they were members of the Association when they were not. They were led to believe that they had certain membership and benefits when they did not. Unfortunately, they could not produce proof of membership, that they’d ever paid dues to the Association, or that they’d received anything directly from the Association. The Association had no record of them and had never billed them or collected from their bank account or credit card account. As a result, these individuals were told to research who took their money (follow the money). That usually worked. Again, Brokers or others were responsible for misinformation.

5. Some callers attempted to contact other companies with similar names or letters and couldn’t reach them so they phoned the Association in order to complain. Like some of the other calls above, these individuals had to be set straight as to whom to contact. Are you seeing a pattern here? It’s one of misinformation, innuendo, guilt by association (or supposed association), misuse of names or letters, etc. But why did these people phone the Association? Here’s the reason and it goes back to you. Few of them could even reach their Brokers.

6. Brokers have phoned in demanding payment for commissions. Commissions were from plans the Association never sold, promoted, represented, or authorized. The Association never appointed the Broker either. But, since they couldn’t reach the other organization which had a similar name, they phoned the Association with their demands. Go figure.

7. Brokers phone in thinking they worked for or were affiliated with the Association when they were clearly never appointed by it. Since one bogus program had used forms of the Association’s name, there were a number of these calls. Some were surprised to hear that the Association resides in St. Petersburg, Florida, not some place “up north”. Others checked their licensing paperwork and had to admit that they’d been duped by someone else. The Association’s Program Manages, are ADMU Benefits (Dallas, TX) so anyone who’s been appointed, should receive information, commissions, and training either directly or indirectly from ADMU. There should be no confusion.

8. One Broker phoned in angry that the Association’s customer service department had dared to correct “their” customer. Indeed we had because the Broker had passed on misinformation that the Association realized wasn’t true. The Association cannot support misinformation in any form. This person didn’t like what the Association told their customer even though it was true. The Broker had passed on bad and misinformation and was now experiencing the result of it. Brokers should know better. The Association has licensed insurance people answer its customer service lines and they know what they’re talking about.

9. In another instance, the Broker actually told one of our officers that it was OK for him or her to sell various “riders” on a Limited Benefit Plan even though they weren’t actual “riders” offered from the same carrier’s insurance plans. As it turned out, “riders” were from different carriers and therefore the term was misinformation. Riders don’t work like that. This Broker said that this information must be true because they saw it on some “official” looking website. As it turned out, The Association’s officer checked. The officer told the Broker the truth but, because the Broker had seen something on a website, they refused to believe the facts. Result? The Broker went on their merry way believing and disseminating fraud, misinformation, and perpetuating a scam. To this date, the Association has maintained that Broker’s name and information and will refuse to do business with them any time in the future. You just can’t beat shear ignorance.

10. Then we receive the angry phone calls by those who ought to know better. As a result, the Association has received phone calls by those who thought the Association was someone else entirely. When corrected, some became angry anyway—even though we weren’t who they wanted us to be. Because they didn’t want to be corrected, they allowed pride to get the best of them. When this comes to a licensed individual, you cannot afford to allow pride to destroy your reputation and reasons for doing only good business.

11. Other callers made threats to the Association that they were going to phone their department of insurance and tell them the Association refused to admit that a bogus program had been sold by the Association. Of course, the Association wasn’t in that business and, surprisingly enough to the caller, the Association always promotes having a customer phone their department of insurance in order to verify information. Soon, the threats became “thank you’s” because these callers were set straight. When all is said and done, the Association cannot automatically “become” whatever someone wants it to be just because they phoned the wrong number or so they can “vent” or gain some satisfaction with regards to a claim or customer service questions they have. Emotions do get in the way of logic however.

12. Some phoned in explaining that they had purchased something from the Association which they’d actually gotten through a totally separate entity. Those calls are always surprising cases of mistaken identity. Some believed that the Association was an “AIM” organization, similar sounding association, or even an agency. It sometimes takes the Association a little time and some questions in order to understand what’s being requested over the phone. Then our customer service reps can expose the misunderstanding. While there have been bogus programs out there, consumers often are led to believe that they actually did buy something they did not. Always have your customers check their certificate of insurance or other contract they might have. There should be correct phone numbers and the names of the actually carriers on that paperwork. Help them know who’s billing them each month so they can contact the correct entity.

13. The Association also receives phone calls from regulators who thought that some program and individuals were related to the Association simply because someone told them that there was a relationship. Some used the letters, “AIM”. Upon closer scrutiny however, the regulators discover the error and find the perpetrators of the scam and then go after them instead. This happened in the past, prior to the Association having its name trademarked in order to protect the organization.

14. Finally, some contacted the Association demanding to speak with certain persons who worked for other organizations or companies. It was easier for some of these misguided people to believe that the Association had somehow “morphed” than the fact that they’d called the wrong number. Yes, even the Association receives its share of wrong numbers.

 

A Pattern Emerges

Did you see a pattern here? In many of the instances, there was bad information or misinformation spread around. As a result, the Association receives phone calls such as those above. I think you can begin to see how ridiculous some of the questions and other responses can be. Again, the Association receives these types of calls on a regular and ongoing basis but why?

The cause again is Agents and Brokers in most of these instances. Scams, misinformation, and assumptions that prove to be untrue are mostly the fault of those who misrepresented something, pass on bad information, or who were misguided in what they believed to be factual and truthful. If they’d bother to prove anything, these types of problems wouldn’t waste anyone’s time or resources.

Chapter 4

Becoming A Proactive Broker

 

Developing A System

Agents and Brokers who become proactive in their business, learn to use a system. Systems are developed by using what works and casting away what doesn’t. If you have a system in place for doing good business, then it might have some of the components listed below. Remember, the solutions are often simple. Let’s examine these components of a good system of doing business so you’ll know what to do.

1. Get your phone numbers straight. Know how to contact the carrier, the organization, the Program Managers, your GA or MGA, your state’s Department of Insurance hotlines, and develop relationships with those who matter most in your industry.

2. Get your policy or certificate of coverage out and read who the carrier really is. Learn what it says and how things are stated. How do you reach the carrier?

3. Call your Broker, GA, or MGA. Get to know them. Find out if they’re licensed or not. Are they appointed with the carrier and the organization as well?

4. Check out the carrier. Find their official website (not a pirated one but the real one). See if what’s listed is in sync with what you’ve been told.

5. Make certain that the contact information with your certificate of insurance, organization membership, etc. has clear and concise phone numbers. That way you will have phone numbers to which you can refer your customers.

6. Know exactly who you are selling insurance for and where to find them.

7. Who’s paying you? If you don’t know, find out. Get their contact info as well.

8. If you don’t recognize a carrier, do some research. Some real names aren’t well known and some names which seem real aren’t real upon closer inspection.

9. If you do recognize a carrier’s name, then make certain that the carrier has approved what you’re selling.

10. Ask your state regulators questions and get answers if you need to. That’s what they get paid for. Develop a relationship with them.

 

Being Proactive Takes Time

Becoming proactive is a process. It takes time and conscious effort. The Association doesn’t need those who’ve helped cause some of the customer service calls listed previously.

If you interview for a good job, you’d be expected to learn about the company and what it does. You’d want to know their expectations of you. That way, when you interview, you’d have an inside track compared to other applicants.

Insurance and Association marketing are the same. You ought to begin to learn about an association as soon as you hear about and become interested in their benefits, products, or services (insurance programs included). Go to its website and start browsing and learning about their benefits, products, or services prior to representing anything to others. This is what professionals do.

The Regulators who have counseled with the Association have indicated that it’s your job to learn what’s contained herein so that you can accurately represent it. As you do that, you become educated to what the Association is. Then you can adequately represent it to others. This process takes time. The good news is that it will be time well spent. The Association would expect nothing less of any professional that intends to represent it.

 

Always Be Accurate

When you represent an organization, it’s best to know something about it. Let’s consider some basic questions regarding associations in general. We’ve derived these questions from attorneys, consultants, and regulators.

Regarding “associations” which may/may not be legitimate:

Is it incorporated?

Is it an LLC, corporation, or what?

Have you proven what type of organization you’re representing?

If so, where is it registered, what’s the state of origin?

When was the organization created?

Who are the corporate officers?

What’s the legal name of the organization?

Does it use any other names?

How does it operate?

What format is used?

Do members have the right to a vote?

Does it have bylaws or a constitution?

Is there a Board of Directors or other governing body?

Is it filed in all states where it does business?

Does it hold a valid and updated Certificate of Authority in those states?

Does it have and actually hold the policy for any insurance it sells?

If not, does it have the valid paperwork which makes it “legal”?

If the organization is NOT listed under the state’s valid and approved associations or incorporations, what does the department of insurance or business regulation have to say about it?

If you don’t know the answers to these questions, maybe it’s time to obtain them. As a licensed Broker, you are responsible for what you sell. If you haven’t verified what you are selling or representing, how could you possibly sell it and still have an excuse for not knowing? Answer: You cannot and your department of insurance or business regulation would be happy to teach you that lesson.

 

Avoiding Extremes

Far too many of us go from one extreme to another. Here’s what that means in our industry. Let’s examine the two extremes:

1. One extreme is to know little or nothing. Within this extreme some know enough to be dangerous.

2. The other extreme is to need so much information that you never make a move. No product is perfect. None covers everything or is free. Someone has to pay for whatever is promoted and there could be exclusions and limitations. In addition, some people find fault with everything and everyone. Even if a program is legal, it’s not perfect.

 

Exclusions & Limitations

Whenever you market an Insurance product, it’s best to memorize the Exclusions & Limitations section of the program. Often, you’ll find this material within the marketing materials and it’s certain to be included with the Certificate of Coverage. But why is this section s important?

The Exclusions & Limitations section always tells you, up front and before any sale needs to take place, what the customer’s expectations should be and what they should not be. That’s important because you never want a consumer to say something like, “The Broker told me this would be covered but now the Certificate of Coverage says otherwise”. Opinions don’t matter, a plan covers what it states it will cover in the Certificate of Coverage and it excludes and limits whatever is listed in the Exclusions & Limitations section of the brochure, marketing materials, and the Certificate of Coverage itself.

 

Errors and Omissions Insurance Companies

E & O Carriers realize that Brokers are often inaccurate because they don’t read material and therefore can make misrepresentations. You will find that type of language within the certificates of coverage for their policies. When any sort of misrepresentation occurs, while it’s correctable for the future, the damage is often already done. You shouldn’t have to use your E & O Insurance if you learn what to say and what not to say or do. All it takes is a compliant mind set. That will lead your to read, review, research, and report anything that doesn’t seem to be compliant. If you didn’t get those R’s the first time, here they are again:     Read            Review         Research      Report

Chapter 5

Association Memberships

This course will help you learn how to properly represent and sell association memberships in general and Association For Independent Managers, Inc.™ in particular. Keep this in mind as you go over this material. After all, that’s what you’re getting paid to do when you represent it to a customer and they purchase a membership. If that weren’t the case, the Association could use an automated website for all enrollments…and robots.

 

A Most Important Realization:

In the association business, those who sell memberships fail to realize that they are selling a membership, not just insurance. If you learn little else, mark this statement and use it often. It’s the membership which is the important item here. Regulators will tell you that and so will consultants and attorneys. The problem is, most Brokers want to look at the dollars and cents and they fail to understand what they’re actually selling. As a result, many are uninformed.

To some Brokers, especially when there’s insurance involved, they’ll key on the insurance part and forget the rest. While it’s easier to do that, it’s not accurate and it misrepresents what you’re doing. So, if a membership benefits package includes “insurance”, you aren’t just selling “insurance”. You’re selling a membership benefits package of which only a part includes insurance. If you’re not accurate in what you say, then you are guilty of passing on misinformation or bad information. In this industry, you can be fined and lose your license for doing things like that.

Again, so you get it straight: Practice saying that you are selling a membership and that it includes a variety of benefits, products, or services and you will be compliant. Say it the wrong way and you’re guilty of misrepresentation and that’s cause to obtain a fine from your department of insurance and it’s cause for termination from a carrier, association, or other organization.

 

Example: One MGA told the Association that his brokers were never trained by the sales organization (which happened to sell a Limited Benefit Plan through association membership) to discuss the membership. As a result, none of the Brokers realized that what they were doing. Even though they could read the paperwork, few ever did. Here’s what happened.

Those who were sold the program by these Brokers, actually joined the association in order to access benefits and insurance. So far, so good but these new members were surprised to receive fulfillment materials that congratulated them on joining an association. Most thought they were only buying insurance. The result was that many dropped the program because they thought it was a scam! Some even reported their Broker!

 

Solution: Always relay that a membership in an association is utilized so that perspective insureds realize what’s going on. Learn to represent the association as well as any insurance within it.

If you just represent the insurance portion (and most Brokers are guilty of doing that), then that demonstrates poor judgment. This would also exhibit poor management by the Program Managers or the association. It boils down to a gross misrepresentation of the facts. In the example above, members who joined the parent association, should have known they were joining an association in order to access a Limited Benefit Plan which was part of the membership package.

Carriers which sell individual major medical plans and/or short term major medical plans, often use an association in order to market the program. As a result, many of them have stepped up compliance in order to promote the association and its many benefits whenever a plan is sold.

 

How Regulators Often See It

In the example listed above, consumers believed they were scammed into joining an organization in order to purchase a Limited Benefit Plan. That was the fault of the Broker who failed to read the paperwork and pass on only accurate and truthful information. But, what else happened as a result of the example above?

Let’s see how the Regulators viewed this same scenario. After all, it’s their opinion that mattes most because it can carry fines and loss of revenue. Let’s review some of the conclusions a Regulator might have made here:

1. The marketing organization was involved in the dispensing of misinformation regarding the carrier.

2. The Broker should have read the marketing material. Materials should have been approved.

3. The GA and MGA should have instructed their Brokers and followed up with them. Same goes for the Program Managers.

4. The association should have instructed the marketing organization and the hierarchy when it discovered what had occurred.

5. Part of the application process should have clearly stated that a person was joining an association in order to receive benefits—one of which was a Limited Benefit Plan.

 

Bogus Associations & Bogus Carriers

Some, especially in recent years, have utilized bogus associations, bogus carriers, and disseminated misinformation in order to collect premiums. The goal was always getting the money. Since there was no insurance in place, those who performed the billing and collecting, pocketed the money and either paid a few claims out of pocket or didn’t pay them.

In most instances, the marketing organization proved to be associated with the fraud. MGA’s, GA’s and Brokers were all implicated in that fraud even most of them were unsuspecting. In the end, customers were damaged by the fraud. Then, various state insurance departments got involved and weeded out who was responsible. Often times, Agents and Brokers were held liable just as those who created the scams were. When it comes to paying for unpaid claims, Agents and Brokers are the best target because they are licensed and come under a state’s statutes, they have E and O Insurance, and they’re easy to find. By fining them, a state insurance department knows it will get its money because the Agents and Brokers need to work in order to eat and feed their families.

When someone makes up a name or misuses another name in order to enrich themselves at everybody else’s expense, there are some unique things that occur. Here’s what usually happens when bogus organizations and plans are sold:

1. Once they find out (usually the hard way) many customers and Brokers scramble to replace bogus coverage.

2. Claims incurred are brought to the state insurance departments. Credit of the customers is normally damaged in the process of non payment of claims.

3. Claims against a Broker’s E & O are made (along with fines).

4. Brokers lose customers, business, and income.

5. Brokers get a bad name and many lose trust for them.

6. State insurance departments have a field day righting the wrongs.

7. Some got their names in the news, their names listed on Cease and Desist Orders from a court or state, and some are eventually sued by unhappy customers in class action law suits brought about by very slick attorneys.

In the end, Brokers wished they’d never heard of the organization, the bogus carriers and would have given anything just to go back a few months or so in time and make the needed corrections. If only they’d done their homework. If only they’d questioned and researched first. If only…

Chapter 6

Misrepresentations & Trademarks:

 7 Great Questions

If you’re going to sell for, and represent an association or organization of any sort, you should always know precisely whom you’re representing. For instance:

Is the organization a viable association or not?

What is a viable association anyway?

Is the insurance product promoted, acceptable and authorized in your state?

Who holds the policy? (Hint: it’s not the insured).

Are both the carrier and the organization authorized to conduct business in your state?

What’s the difference?

How would you know?

There are ways to find out. Let’s review.

The Association For Independent Managers, Inc.™ is a trademarked association. The very name is trademarked and cannot be used by any other organization, broker, or individual without the Association’s express written permission.

Misusing the Association’s name has occurred in the past and with dire consequences for those who misused the Association’s name. Misrepresentation is a form of abuse. Never take the name of any business lightly…even your own.

The authorities look upon trademark violations quite seriously. They’re also red flags to other things that could be going on which indicate improper business practices. You don’t want to throw names around as if they are meaningless.

 

But, why is this name stuff that important?

It’s important because there are many potential ways in which a name could be misused and misrepresented. Misrepresentation is a fraud. It’s punishable by your state’s insurance department under administrative statute. Again, when states need money, they’ll look for the low hanging fruit first.

As mentioned, misrepresentation is a type of abuse and it is considered fraud whether it’s purposeful or not. Misrepresenting an organization means that it’s going to be perceived, due to your misrepresenting it, as something it is not. In addition, misrepresentation involves telling people that an organization is possibly controlled by someone that really doesn’t control it and that it is going to perform some function when it clearly has made no representation to that effect. You need to find the answers before you sign up to represent something or someone. If you don’t, when this occurs, the authorities have their green light to do their jobs and some make their jobs much easier by connecting all the dots.

Don’t become a perpetrator of any fraud, even unknowingly, by passing on information you haven’t verified. As for selling association memberships and insurance, it’s a verify, verify, verify business.

 

Misuse of the Association’s name:

If you utilize the Association’s name without permission, then the Association has a legal right to come after you for damages whether implied or real. That’s part of what occurs when you trademark a name. Never “cut and paste” information from one website to another without prior, written permission from whomever you are accessing information from. If a name is misrepresented in any fashion, then those who may have been damaged by that misrepresentation might also wish to come after you in a legal fashion, for the actual or perceived damages.

That’s why fax blasting, spam, and other forms of marketing are wrong. The organization has not approved the methods, the material, nor the promises made therein. Who gets the blame? The fax blasters, spammers, and anyone associated with them. Hopefully that would never include you. Doing things outside what’s allowed by the Association can result in immediate termination, being turned in to your state’s department of insurance, or possibly worse things.

 

A “For Instance”

For instance, if you used the Association’s name on some advertising, fax or email blasts, and promised something to someone (such as “guarantee issue”, immediate acceptance, no pre-existing condition waiting periods, etc.), then you might be liable to deliver on your promise. Or, in some instances, you could be sued if you did not provide what you originally promised in writing. It’s THAT serious. Some stuff flows down hill and guess who’s there waiting…you!

It’s best to reference approved material and discuss the fact that the carrier, the organization, or other entity has promised to perform some duty, cover something, or make some representation. By only referring to what’s already in writing, you aren’t putting yourself into the middle of anything that could come back to bite you in the butt.

 

Insurance Carrier Name Misuse

If you use an insurance carrier’s name or association’s name in email or fax blasts, on your business card, in literature or brochures and you haven’t obtained written approval to do that, you would be guilty of misrepresentation.

Business cards for example, are often provided by the carrier (for a fee or a template sent out without any fee) OR, there is an approved card for those who are properly appointed. In other instances, what you can or can’t say on a business card or with other forms of advertising should be noted. If you haven’t been appointed with a carrier, an organization, etc., never use the carrier’s name. Some carriers will come after you and so will some associations if they’re brought into the mix. This one will.

A law suit might come from more than one direction. Both Association (and/or carrier) and even the customer might wish to sue you for your misrepresentation of fact and truth. If you don’t have written approval for something, get it or forget it. It’s not worth a few bucks. There are other ways to make money legitimately.

Chapter 7

Misuse Of Names & Information

 How It’s Done

Misusing names and information are also a problem in other ways. Here are a few names which have been misused:

Carriers. Some will make it sound as if a certain carrier is behind their program when it is not.

Reinsurers. Reinsurers’ names have been used in an effort to deceive others into believing that there was reinsurance when there was none.

Associations, clubs and other organizations have been misrepresented and their names thrown around.

Third Party Administrators, billing and collecting companies have been used in order to gain trust when they weren’t linked to the program in any way, shape, or form.

Individuals’ names were used to gain support, confidence and faith so that Brokers and others would feel comfortable with the bogus program.

False names, made up names, names which were close to but not really the well known entity were used in the past. Official sounding names, unions, associations, state names, have also surfaced. Examples would be names which reference a known entity or which sound like the legitimate company but are just a letter or two off. Again, Trademarking usually takes care of those issues.

 

What To Do

If someone lists a name, go and check it out. Don’t pass on bad information and never participate with someone in marketing something you now nothing about. Know what you are doing is legal, acceptable, approved, legitimate, etc. before you do it. Don’t allow the promise of big commissions, quick and easy sales, or getting something which seems “too good to be true”, to cloud your judgment.

If you don’t follow the rules, you could be fined by the authorities. For what? For spamming, misuse of information, etc. or you could lose your license to market certain or all insurance products. If you haven’t checked, those are all fineable offenses by your state’s department of insurance and…they need the money.

Today, many states have changed the way they go after rogue Brokers. Fines have increased dramatically over the years. Administrative actions are also more harsh because the level and amount of scams have increased dramatically. It’s not worth taking a chance these days so don’t do it. If you lose your license, even for a few months or a year or two, you’d be out of business. That’s how serious this stuff truly is.

By now, you ought to know what to do. Go and check out anything you are uncertain of and that certainly includes a carrier, an association, and a marketing organization.

 

More Examples of Misrepresentation

Let’s make this even more specific. The goal is to help you stay out of trouble so you shouldn’t mind. Maybe you can help others stay out of trouble just by knowing this information.

If you represent an association, make certain that you know who you are representing and that they are incorporated, operating legally, and have been accepted by a state’s department of insurance. Is the particular plan approved in your state? What about the organization itself? They’d need a Certificate of Authority to operate outside their home state and in your state. If they don’t have it, that’s a red flag.

But, you have a license, issued by a state. That places you under their administrative duties and responsibilities. So, what are states requiring of those who’ve been licensed by them? Plenty!

A number of brokers were fined, reprimanded, suspended, or lost their licensed during 2009-2010 because they were expected to know things they didn’t and do things they didn’t do. You can go online or tap into your state’s publications and see a list each month. But, what did these people do? Like what?

 

Getting Down To Specifics

Let’s make this specific to selling association benefits, products, or services. If the association is incorporated in your state, then it’s going to be discovered online.

In Florida, the Association For Independent Managers, Inc.™ can be found on www.sunbiz.org.

If the association is not incorporated in your state, then there’s something else to do. You’ll need to log onto a state’s website to verify whether or not the organization you represent, has a Certificate of Authority.

You can also verify, with the department of insurance as well if any insurance promoted through the organization has been approved. More about this shortly but this is the most important part of this section. If you fail in this, you will be possibly and unfortunately (for you and your customers) be misrepresenting an unauthorized entity and that’s punishable by fine, possibly a suspension, administrative action, loss of license, and the possibility of having to pay claims out of your own pocket.

 

Don’t Be Duped!

During the past year alone, tens of thousands of Brokers, just like you, have been duped by some very slick people. You can find a number of these people mentioned in the same lawsuits over and over again in various states.

If you are in doubt, contact more than one state’s department of insurance and ask pointed questions. Use names, carrier names, etc. Get the answers you need BEFORE you jump in with both feet. Don’t be afraid to name names.

We mentioned tens of thousands of duped Brokers. Those are real numbers. Some of these Brokers and those who duped them (as well as their MGA’s) are known to the Association. In one instance more than 400 brokers were actually taken to court and expected to pay claims incurred by a bogus health plan. In others, it was larger or smaller numbers but the outcome was the same. How did that happen?

 

Here’s How It Happened

Again, this is a real life example known to the Association. This is exactly what happened:

1. The bogus companies told Brokers what they wanted to hear. Some of us never live life beyond that point. It’s sad but true. Hearing what you want to hear means you don’t question because then, you might hear what you don’t want to hear.

2. It looked good. Why, they even had a website, a building, and official looking stuff. Their paperwork looked real and you could speak with the head of the company. It seemed to have all the elements but then, you didn’t know about all the “other” elements.

3. Familiar names were used. That way, everyone knows those company names. They’re thrown about as if there is a legitimate relationship with the carrier, the department of insurance, attorneys, the state of incorporation, well known brokers, certain plans of insurance, etc.

4. The program paid well. This is normally a huge red flag. Sometimes the amount of commissions silences a person’s common sense.

5. Others were doing it. Peer pressure wasn’t left at the junior high graduation after all. Safety in numbers doesn’t apply to doing anything illegal. They’ll find a lot of people just as rapidly as they will a few who are caught doing wrong.

6. Some checked but it was all too new and there was no court or other legal action…yet. As a result, everything sounded legitimate.

7. Linking with valid organizations, gave the scammers a legitimate appearance. Again, no one checked and those who did, failed to ask hard and fast questions.

8. Slick talking presentations worked best. Also included were, real websites, real people on the phone, and real sounding names. That’s all it takes to fool some.

9. No one within a state’s department of insurance, had heard anything negative about the program…yet. So, the assumption was that the plan was OK when it wasn’t OK.

10. One person who happened to rank high in a brokerage hierarchy, was duped so Agents and Brokers thought everything was OK too. Sometimes, it just takes fooling one person. Then they pass on the bad information to fool the rest of the unsuspecting sales and marketing folks.

 

Duped, Who Me?

No one wants to admit that they could have been fooled by anyone. That would spoil the façade we’ve each cultivated as responsible, professional, and mature adults. But consider this:

Whenever someone tells you what you want to hear, you listen and often believe it. After all, it’s what you wanted to hear. If this weren’t true, then no political candidate could lie and people vote for them ever again. But, as we all know, we’ll still vote for those who tell us what we want to hear.

So who did dupe others into doing their dirty work for them? Here’s the answer:

It was slick marketers, slick talkers, and fraudulent individuals who perpetrated yet another scam upon the insurance industry.

What they’ll often do is use the name of an organization so that if anyone checks, they’ll find the organization. Everything they do seems so legitimate that no one questions them or their motives.

No one seems to take it a step further either. That next step would be to verify that the organization is behind the product, is actively marketing it, and that they have a knowing and direct relationship with those with whom you’re dealing—that is your hierarchy. You’d need to know that the organization held the policy. You’d have to question the carrier and get all of the right answers.

Here’s a simple approach to exposing frauds:

1. Anyone can create official looking documents.

2. Anyone can host a website, rent an office, or have brochures made up with their name on it.

3. Anyone can hold teleconferences, Webinars, or meetings.

It’s unfortunately up to people like you and me to verify whatever we hear, receive, or think about marketing.

 

Real Life Example

During 2009 for instance, some brought bogus carriers to the Association in an attempt to utilize the Association’s memberships so they could sell their insurance program to the unsuspecting public. So, what happened?

The Association made several inquiries into several bogus carriers which were brought to it. The Association’s hierarchy went online and did their research and followed up with phone calls to departments of insurance, attorneys and others. It turned out that those who’d brought these programs to the Association understood that the “insurance” wasn’t authorized and there was no legitimate company which was licensed to sell insurance in any state.

As a result of discovering this fraud, the Association immediately issued a Cease and Desist to those who were planning to sell unapproved, unauthorized, and unlawful insurance. Since there was no viable company and no insurance behind it, the Association refused to do business or allow the scam artists to represent the Association or to add members to it.

 

Bottom Line

So, the bottom line is simply this. Why do that? Why go to “the dark side”, as one of our consultants puts it? Why would you knowingly want to sell an unauthorized health plan and misuse an association’s name to aid and abet?

The answer was simple. It was because someone was attempting to misuse the Association’s name and link it to such a fraud so that they could make money. Make money? Yep, at someone else’s expense. Actually, at everybody else’s expense. Here’s how:

By billing and collecting supposed dues and/or premiums, and not actually purchasing valid insurance on behalf of their customers, those who sought the money without paying out the premiums to the carrier simply had the option to keep the money. If there was a claim, they could choose to ignore it, pay it out of their own pocket, or deny the claim. While the Association doesn’t know what actually occurred, those options were ever present to people who didn’t play by the book nor the rules within the book.

Chapter 8

Do Your Homework

Hindsight

They say that hindsight is 20/20 and that’s most often true. You might choose to look up those entities who promoted various bogus programs. Go online and see who’s associated with them. You have a right to know whom you will not wish to do business with in the future.

It’s always best to know what’s going on but you’re going to have to open your eyes. Doing that might reveal some things you won’t want to face up to…like:

1. That you’re going to lose your income due to the fact that you’ve been selling for the wrong organization, wrong carrier, and wrong something else.

2. That certain individuals whom you trusted shouldn’t be trusted.

3. That a program you’ve been associated with in the past, hasn’t been legitimate.

4. That someone didn’t do the right things when they recruited you and others to represent them within many of the states.

You can’t do anything about the past except to learn from your mistakes. Your future can be better than your past if you make the right course corrections. That’s why we refer to this program as a “Course”.

 

Misuse Of Names & Lying To Brokers

Let’s get back to the misuse of names. Sometimes, names and use of names are very important and when it comes to committing fraud, it’s very important. In some instances, names were thrown about as if there was an active and viable business relationship when there was one. Other times it was done as if the carrier or organization was actually endorsing something when it clearly wasn’t. You wouldn’t have known that unless you checked. One of the wise MGA’s the Association knows, did his homework and actually had the legitimate carrier on the phone as the unscrupulous company misused its name over and over again.

You also had unscrupulous individuals who said they were incorporated when they weren’t, that their company was a licensed or valid Third Party Administrator when it wasn’t, or that something else was true when it was not true at all. Some used insurance terminology for non insurance products. Because you didn’t think to verify what they were telling you, you were duped. Most Brokers who look for solutions for their customers are going to come across scams, liars, thieves, and others who are unscrupulous. The good news is, you don’t have to business with them. That especially applies to the future since we cannot change the past.

In other instances, viable companies had their names used by those who were unscrupulous. In these instances, the bad guys made out as if they had the policy, certificates of coverage, plan designs, etc. They made it seem as though there was backing and approval of a well known company when they did not have it. Brokers and insureds believed that these carriers were actually behind certain health plans when there was in fact, NO carrier behind them. The Association could name names but it need not. You probably already know some of them.

 

So, What Happened?

When misuse, misrepresentation, lies, and deceit are at work, someone always gets hurt. Others make money and try to move on before they’re caught in their lies. But, in this business, most are caught.

The result found within the examples above, was that there were claims but no real insurance to pay them. When some insureds called the carriers, they were told that, no, there was no coverage for them and none had ever existed! Brokers are usually asked to pay for what the insurance would have paid.

If you haven’t, do a Google or other online search and look for certain company names, names of those who head certain programs, and associated businesses, plans, etc. You might discover that you’re dealing with great people or outright frauds. Then, go check with a department of insurance to determine who’s licensed and who’s not.

Finally, log onto a state website so you can determine who’s incorporated and who’s not. Misrepresentation can take many forms and you need not be taken in by it any longer. Education is power but ignorance hurts. I don’t know who originally said that but they were right on the money.

 

Examples of Misusing Provider Information

 

Some misuse provider information as well. This has been done both out of ignorance as well as purposefully. How did this happen? Here are 12 examples.

1. Mixing benefits of more than one provider in a fashion other than what’s allowable by regulators. Aggregating benefits improperly, mixing DMPO’s and giving false appearances all qualify. The Association knows the rules and promotes what’s legal, ethical, and moral. Use the approved programs and stay out of trouble.

2. Making false promises. Never make promises that you can’t keep. Don’t promote any not made by or approved by any provider. If someone asks about what’s covered, how long the pre-ex is, whether someone will be accepted, etc., make certain you get the right answer directly from the right source. If you don’t know the answer to any question, go find it. Be 100% accurate and truthful. Reference only authorized materials.

3. Making up information rather than using the approved materials. Never ad lib, be certain.

4. Not understanding the DMPO rules and regulations. If you don’t know them verbatim, don’t try and explain them.

5. Changing, cutting and pasting, or altering approved material. Nice way to get yourself in BIG trouble.

6. Creating your own brochures without obtaining prior written approval.

7. Sending out false material such as spam or fax blasting. Even sending out approved materials via those means is not allowable.

8. Attempting to circumvent providers in any fashion.

9. Using trademarked or copyrighted names without authorization.

10. Attempting to represent a provider when you have no contract with them.

11. Not adhering to the Association’s approved marketing materials, approved websites, authorized programs, etc.

12. Not knowing the rules of your home state with regards to DMPO, discount programs, or other benefits, products, or services.

Chapter 9

How Scams Often Work

 They Start Simple

We’ve seen misuse of names and that’s a misrepresentation. But, why was this misrepresenting such a problem? It’s really simple. The real concept is how to make the most money without having to do anything yourself. For those who want other people to do their dirty work, this is the perfect business but it’s very short lived.

Some people will band together and form a company, whether legitimate or not. Then they create or obtain some sort of insurance plan, find an association or organization to link it to, and you know the rest of the story. The organization could be legitimate or possibly unknowingly “used”. Maybe the organization is made up. If it is, then there may not be the relationship you think exists between the insurance and the organization. If the organization’s real but there is no link between it and the policy, then, Houston, we have a problem!

Then, someone creates an official looking website, rents a building or office, puts together some marketing materials and they come out with a plan that they want others to sell so they can make plenty of money. After all, not it looks legitimate.

What’s next? Then, these people go out and recruit brokers to write business for them under various names. They’ll change the name of the “carrier” even when there is no carrier. When this happens, those who thought they were insured, aren’t insured by anyone. The promoter just keeps the premiums and pays some claims out of what he/she has collected. If there are no claims or if the promoter doesn’t’ feel like paying claims, then nothing gets paid.

Who ultimately pays? The brokers must pay all the claims out of their pocket OR their Errors and Omissions carrier (if they accept the liability) would pay. In Errors and Omissions contracts, there is language which suggests that if there is no viable carrier, that your E and O insurance is not valid nor could it be expected to pay claims. I think you see the point. We estimate that tens of millions of dollars were made with just a couple of the schemes listed above.

 

Red Flags

Here are some of those red flags that caught the eye of Regulators:

1. There is no association by that name. You can try to check the state of origin but never find it.

2. The association doesn’t have the ability to hold a policy nor sell insurance. That’s because there’s no link between the carrier and the association.

3. The Association has no Certificate of Authority in any state where it represents itself as a viable company.

4. Those who run the agency aren’t the same as those who work with or for the association. This happens often. Is it fraud? Maybe, maybe not. It’s best to check with your state’s department of insurance.

5. The carrier doesn’t know anything about their plan being sold through any association, marketing group, or even in certain states.

6. Some of the benefits come from other associations who have no idea that their benefits are being accessed in such a fashion. Some claim to have “Affiliation Agreements” but, in actually, have nothing legal to show you.

7. The commissions are high enough so you never question. You just wait for pay checks in the mail. I hope this isn’t you. Some Brokers have their common sense frozen by the promise of big bucks.

8. The training for the Limited Benefit Plan never mentions association membership or that the insurance is part of a membership package.

9. The insurance “carrier” names keep changing for various reasons. One bogus program changed “carriers” half a dozen times during the same year!

10. You have a difficult time getting through to customer service numbers and/or no one ever gets back with you.

11. You find your program on the evening news.

12. You see your up-line Broker’s photo at the Post Office.

13. There is no association activity outside selling a health plan, Limited Benefit Plan, Accident Insurance, or discounts, etc.

14. You find multiple companies, multiple layers, and no one to talk to when you try to unravel what’s going on. You are told to “Shut up and sell”.

15. There is no valid insurance license in place in the states where it should exist. This is especially true when proving whether or not those who are supposed to be licensed, actually are. You check, they aren’t.

16. The website doesn’t read like an approved website. If there’s insurance on it, then there should be disclaimers, carrier information, and other approved materials which the regulators have approved for the general public in their states.

17. The certificate of coverage which the organization issues, was not approved by the carrier.

18. If there are DMPO (Discount Medical Plan Organization) benefits listed, they’re not approved in the format you view them.

19. Some plans claim to have one carrier and then “riders” offered by various other carriers. This cannot happen in a valid situation because you can only have “riders” onto the SAME PLAN which is offered by the SAME CARRIER!

20. The website looks sales oriented rather than compliance oriented. This is a major red flag. No regulator will overlook the glitz of a website and not require compliance.

21. The FBI comes to your door.

22. You find you are being followed.

23. The name of the carrier changes between the time you downloaded an app until the time the customer finishes it.

24. Any problems are always someone else’s fault. The buck never stops where it ought to.

25. You read about the bogus program in your state’s department of insurance newsletters.

26. Getting through to the head person for verification, is like counting the grains of sand in the desert, with tweezers.

27. No one at the home office knows anything and they try and “sweet talk” you rather than take care of any real problems.

28. Claims are no longer being paid.

29. Your doctor phones because the paperwork came back as “undeliverable”.

30. Your Errors and Omissions carrier phones you on your birthday.

 

Misrepresentations: Examples & Specifics &

Red Flags (Oh, My!)

Let’s get back to the issue of misrepresentation. You need to know more about it because it’s not going away any time soon. If there’s easy money to be made, then you’re going to have misrepresentation of truth, facts, or companies and organizations. Why? Simply to make more easy money. Examples of misrepresentation can include a host of things that most brokers never consider. They can be found in several areas. Here are a few of them:

1. Misuse of name recognition. Misuse of the name by implying you are working with an entity when you really aren’t OR exaggerating your involvement with an organization. An example would be to state that you have a business relationship with an entity when you have none and are just using their name.

2. Misuse or altering a name. Attempting to appropriate, alter, or co-brand a well known name. While this often gives instant credibility to a bogus enterprise, it’s not legal and needs to be checked.

3. False advertising. If you misrepresent what you have, how it works, who’s supplying it, who’s insuring it, etc., you could get yourself in a lot of hot water. Never assume anything. If you do, then all someone has to do is fool one person and they’ll pass on bad information through their “down line”.

4. False promises. Alleging that a plan will cover something not covered in the policy. Some in sales will tell people anything just to get a sale and some up front commission money before they move along to the next sucker.

5. Not verifying information. Hearing inaccurate information and passing it on is another example. Always verify what you say before you say it. If you don’t, you could be guilty of misrepresentation.

6. Use of wrong terminology. Learn what you cannot say and what you can say. If certain words, such as “mini med” aren’t allowed in your state, then never use those terms—even between other brokers.

7. Making up answers. Never make up an answer. You could be misrepresenting something in the process. If you don’t know the answer, tell the customer you’ll get back with them regarding the RIGHT answer.

8. No TPA. If a plan requires a Third Party Administrator (TPA) because there’s insurance premium involved, then make certain there is a licensed (and find-able) TPA in place doing the billing and collecting of funds.

9. Mistaking members for customers. Are the members of an association your customers or are they members of the organization? You might be surprised to find that they become members of the organization so don’t misrepresent that they’re your customers and that you can simply “move” them at any time you wish. That could become a downfall if you exercise that misrepresentation. It’s happened before.

10. Pathetic customer service. If you represent an entity where no one can get through to their customer service and/or claims numbers, think again.

11. No info regarding the association. If your broker training offers no information regarding the association that’s supposedly behind the product, then think again. What is the broker in charge actually telling you? They’re misrepresenting that you are purchasing insurance, not an association membership. That’s another misrepresentation.

12. Unlicensed Brokers. If some organization, MGA, or GA, broker, etc. represents that they’re “licensed in all 50 states”, maybe they need to prove that to you first. If not, they’ve just misrepresented something and you might be guilty of passing it on to others. Don’t rely upon someone’s word, find proof of it. Go to any state’s department of insurance website and see if they hold a valid license there. If not, move on.

13. Falsifying incorporation information. If someone claims to be incorporated in a certain state, go research it on that state’s website. You might find who else is part of their company and whether or not they really are incorporated. If they lie about this, what else are they willing to lie about?

14. Not verifying names and information. Go online and type in key words regarding those you plan to do business with. If what they’re telling you is accurate, you should be able to find it. If not, keep going and find someone more reputable.

15. Using forged or false documents. I’ve personally seen that unscrupulous individuals have taken applications from one company and used them for another…verbatim! Others have used certificates of coverage and other forms which they’ve pirated from valid companies and then they’ve altered them for their own purposes. Some forms used still had some of the original company info at the bottom! Yes, thieves are THAT stupid and lazy, they actually left the wrong (actually right) information at the bottom as they used that paperwork to further their schemes.

 

Websites?

At one time, you were considered a valid organization or company if you had a building. You’d often see a building listed on any marketing materials because that somehow made the company seem legitimate. Things have changed however. Today, people think you’re legitimate if you have a website. Heck with the building, you need to have a website.

So, websites are important to selling, representing an organization or insurance program accurately. Therefore, let’s discuss how to do it legally.

First, legally speaking, regulators have outlined that an approved website will read like an approved brochure. The carrier, limitations and exclusions, plan design and other information need to be there for easy review. In other words, most of the websites you’ve seen for various associations, weren’t in compliance.

Second, the association should have contact information, hierarchy, bylaws, and other information listed on the websites. If it’s not there, it should be.

Third, association websites should look more like association sites rather than insurance selling sites. In the past, certain unscrupulous individuals had glitzy, expensive websites which were nothing more than insurance selling mechanisms designed to entice Brokers, potential insureds, and others to the site and to purchase. These websites, although popular with unsuspecting Brokers, are not acceptable in the industry.

 

Association Websites

Fourth, everything on an association’s website, must be approved by the carrier, various state regulators, etc. In the case of the Association, a number of state regulators have given their input, corrections, and then approval prior to changes being made in the website. We expect this to be an ongoing process and you should too.

No Association material may be placed on ANY website without written approval. From whom? From carriers, DMPO’s, states, the organization’s hierarchy, etc.

But, what does this mean to you? Always consult your hierarchy and the Program Managers, prior to any website development or placement of any material or links. Why is this important? The Association must also receive written approval from regulators, DMPO’s, providers, carriers, and other regulatory bodies prior to any web material being posted for the pubic. If rogue Brokers circumvent the system, they place themselves in jeopardy.

Perhaps one of the most important aspects of association websites is that of compliance. Whereas some websites look great and might sell a lot of insurance, those who operate them would think nothing of gaining for themselves 500% commission, high enrollment and other fees, and circumventing logic, common sense, moral and other aspects of our industry, and thereby destroy their own business and the industry with it. While we are looking to help enrich our Brokers, it’s not at the expense of all else.

 

Course Study Questions:

You may need to review the NEXT chapter in order to answer all of the questions listed below.

1. What’s “DMPO” mean?

2. How important are the letters “AIM” and why?

3. How could those letters be misused?

4. Is the Association For Independent Managers, Inc. trademarked?  If so, why?

5. What are 5 red flags which could be attributed to a bogus association or insurance program?

6. What’s the significance of replacing “For” with “Of” for the purposes of this course?

7. Why does the Association want you to take this course?

8. List several ways that scam artists have duped Brokers into selling their programs:

9. How could you misuse names in order to create a bogus program?

10. What’s a Certificate of Authority?

11. What did you learn about association websites?

12. What is “Serve America”?

13. According to attorneys, regulators, consultants and others, how are misrepresentations often spread?

14. Should you gain written approval prior to posting anything questionable upon a personal or business website?

Chapter 10

Misrepresenting “AIM”

& The Association’s Name

 “AIM” Misuse

Some individuals and organizations have attempted to misuse and misrepresent the Association For Independent Managers, Inc.™. Here’s how.

One way was to name a company after “AIM” and use the words “Health Plans” or “AIM Insurance” or “AIM _____” to make it sound “official”. This meant that those who attempted to deceive others; wanted them to believe that the Association was sponsoring, held the policy, and was actually involved in selling the insurance when it was not. Since a viable acronym for the Association has been “AIM”, “AFIM” or some other derivation of the name, some have utilized those letters in their name as well as they attempted to sell something to someone. Others never intended to misuse those letters and, as you might already know, the Association has no corner on the market for using those letters, others may use them legally. A problem arises only when there is misuse.

Here are the facts. Letters cannot be trademarked in the same fashion a complete name or corporate name can. The letters, “AIM” or “AFIM” have been used to describe the Association and accurately so. “AFIM” is most accurate. Always verify with any organization, not by the abbreviation, but by its legal name. For instance, we’d use “AIG” for an insurance company but others could use it in order to cause you to believe that their plan was insured or backed by AIG when it wasn’t.

 

Chapters

One of the organizations mentioned above, misrepresented that it had created a “chapter” of the Association when it had not. That organization was founded upon a fraud because had never created a chapter of the Association, It never incorporated as a chapter and it never passed any “inspection” by any authorities of its state.

When the members of the Association saw the name and that the organization was a “chapter”, many believed it because no one checked. As it turned out, there was no “chapter”, no incorporating, and no one in their home state knew anything about those who had made promises and who’d conducted business “on behalf of” the Association or acted as if they were the Association. In fact, the closer the regulators looked, the more fraud they discovered. They’re still looking.

 

Fraudulent Carriers

Some organizations have misrepresented that they had various insurance carriers behind them when they clearly did not. The fraud was upon the organization as well as the carrier. It turned out that the carrier had never worked with that organization so when the insureds who purchased health plans checked, guess what they discovered. Yep, no coverage!

The Association has discovered that carrier fraud can be of four basic types:

Type 1: No real carrier. There is no carrier but a valid carrier’s name is used. No valid carrier exists but the perception is that, due to the valid name, a particular insurance carrier is actually behind the plan. These are very short lived supposed relationships.

Type 2: Unauthorized entities. There is a fraudulent carrier which is not authorized to conduct business. Such was the case for Beema-Pakistan, Serve America, or Secure America which turned out to be anything but secure. The companies existed in some form but they weren’t valid. Go online and review those names before you go any further.

Type 3: Forged documents. There are forged documents, falsified forms and records, etc. which are used where no valid carrier exists. Some plans are simply “made up”. As a result, people think they’re buying insurance when they aren’t.

Type 4: No policy. The association makes it look as if it holds the policy of a particular carrier when it clearly does not. It’s only acting as an agency, not an association.

 

How To Check

Carriers can offer you valuable information regarding organizations and individuals they do business with but never, ever have 1000 brokers phone into an organization to check. Instead, utilize the highest level MGA (Managing General Agent) or other attorney or trusted individual, to make the initial call. That way, your inquiry will be perceived as helpful, not harmful to the carrier. No one wants 1000 phone calls all about the same thing.

In the Association’s Limited Benefit Plan, the Association holds the policy and it’s with AMLI or American Medical Life and Insurance Company. As a viable carrier which obtains approval with states for the carrier, the plan, and the Association, the broker can be assured that they’re working with an approved program. Here’s how it works.

 

How AMLI Does It

Whenever the AMLI, as the carrier, goes into a state, it obtains approval of all their filings for both the Limited Benefit Plan’s design, limitations and exclusions, plus, AMLI also brings the Association along with it in order to have it presented and approved prior to any sales of insurance within a particular state. This is important for several reasons.

The Association must obtain a Certificate of Authority and be listed on a state’s website in order to conduct business in that state. This includes having an office where legal process may be served upon the organization. If you represent a company or association which does not have a filing on record with a state, then the organization is operating outside the law in that state—especially if they’re selling insurance. Always find out whether or not the carrier and association has been approved by the state’s department of insurance.

When the State of New York’s Insurance Department discovered problems regarding some who’d misused or abused their relationship with AMLI, it was AMLI which stepped up to the plate, paid all the claims, and even paid the incurred expenses rather than allow its good name to suffer. As a result, the Association has made a wise choice in working with a company which literally lived up to the phrase, “The buck stops here”. When it comes time to either “fish or cut bait”, you want a business partner who’s going to stick with you and that’s exactly what the Association found.

 

How Important Is “Of”?

Remember the impeachment hearings for President Clinton? Those were sad times for America but I learned something from the experience.

Those within the legal profession have always told me how important words are but I never understood it fully until things such as the Clinton Impeachment Hearings occurred. It was then that one of the important items brought up by the Clinton defense team involved the use of the word, “is”. It became known that, depending upon what the definition of the word, “is” actually is, (no pun intended), that a certain understanding of facts which were pertinent to the case could be supposedly understood one way or another. I learned a lesson in that. Yes, even small words are very important.

Some have, in the past, misused the name of the Association by inserting “Of” in place of “For” in an attempt to deceive. So, one perpetrator used the “Association of Independent Managers” not the full, correct, and legal name which is the “Association For Independent Managers, Inc.”. Even when corrected by the Association, they persisted. This became an instant red flag to the Association but few realized the error and so many were deceived by the simple use of the letters, “O” and “F”. This resulted in a case of mistaken identity. The use of “of” in place of “for” was planned and intentional because of the numerous times the Association offered correction. Something that small demonstrated the willful intent to defraud. The State of Florida was made aware of this fraud and it, along with others, are pursuing those who blatantly attempted to deceive others. The jury’s still out as of this writing.

 

Bottom Line

You need to learn that whenever someone makes a mistake with respect to misrepresenting the correct and full, legal name of an organization, that this could be a potential red flag. Learn it well, because this seemingly small detail has been responsible for multiple millions of dollars of fraud just within the association industry alone! That’s no exaggeration.

Brokers, attorneys, compliance people, and professional consultants who work with the Association have literally seen the damage reports and the hundreds if not thousands of brokers being dragged into court, administrative hearings, paying of administrative fines, etc. This is serious business folks and it often starts out very small. Once you’ve been deceived, even in a very small area, the process has already begun. Again, it’s the Association’s goal to help keep both you and the Association out of trouble.

Since this incident, the Association has had to trademark the very name of the Association in order to avoid further misuse and misrepresentation of both the Association’s name as well as help insure that this does not happen again with other misuse of other names. Keep a sharp eye out and verify, verify, verify.

So, what’s the bottom line? Why would anyone use misrepresentation or anything else associated with an organization, carrier, etc.? Why attempt to dupe Brokers into selling for you? I think you know the answer. It’s called m-o-n-e-y.

 

Course Study Questions:

1. What does “AMLI” stand for?

2. What’s “Beema-Pakistan”? (if you don’t know, that’s OK).

3. List four types of fraud against carriers which was mentioned in this chapter.

4. What is the official name of the Association?

5. How important is switching “For” out of an association name and inserting “Of”?  Why?

6. What did you learn from this chapter that you were previously uncertain of in working with other organizations?

Chapter 11

Get The Facts

 

Facts About The Association

Let’s switch gears and focus on the positive. In life, you either know something or you don’t. So, another issue is that of knowing important facts and information about the association you represent. Let’s use some examples here and cite some facts regarding the Association. You could plug in any association but, since we know about the Association For Independent Managers, Inc.™, let’s use it as our example. You could use these facts to represent the organization or to sell someone on it. After all, people join associations for a number of reasons—hopefully not just to purchase insurance.

1. The Association was started in the mid 1970’s by Jack Winebrenner. The exact date remains unknown because the Association evolved into one over time. By the late 1970’s however, the Association was in existence and operational.

2. Jack Winebrenner has owned and created many businesses, incorporated thousands of them, and Jack incorporated the Association as well in January, 1979 in the State of Florida. The Association has always resided in St. Petersburg, Florida.

3. The Association is listed with the State of Florida and operated as a not for profit organization. You can view that at www.sunbiz.org.

4. The Association was created to assist those in small businesses with learning how to become successful by use of educational courses, tools, and resources. That perspective survives today.

5. The Association created a CBM or “Certified Business Manager” program which is the Association’s version of obtaining an MBA (Master of Business Administration).

 

a. While this program is a certificate program, it is not a licensed and accredited degree program. It does however, instruct individuals in small businesses in how to wear the many hats a small business demands.

b. Small businesses demand that an owner, manager, or other employee, will often wear many hats such as payroll specialist, manager, owner, sales person, marketing manager, tax person, accounting and bookkeeping specialist, insurance or human resource director, and so much more.

c. The CBM Program is currently being updated and it’s due out very soon with a variety of new and up-to-date courses. Certificates of Completion will be granted to those who finish their course work.

d. CBM Program offerings will include both required and elective course material. Material will be spread through at least 5 categories just as it has been for more than 30 years. Coursework will center around topics such as fundamental principles of payroll, accounting and taxes, insurance, sales and marketing, as well as management.

 

6. You need to review the Association’s website on a regular and ongoing basis. Here are some of the websites you should become familiar with:

a. The Association’s official website is: www.associationforindependentmanagers.org

b. The newsletter can be found at this site (plus archives): www.associationforindependentmanagers.com

c. Free, no access offerings, share this with your family, friends, neighbors, etc.: www.lowlowprices.us

            d. Your own affiliate enrollment website.

e. View the Association’s incorporation information at the State of Florida’s website: www.sunbiz.org

 

It’s On The Website

The Association’s website holds the answers to a number of questions. For instance, if you wanted to know more about the “team” that operated the Association, all you’d have to do is locate that tab on the website. Duties, responsibilities and those who fulfill them, are listed there for all to see. The Association is quite transparent and has nothing to hide when it comes to what it’s been doing for more than 30 years.

If you haven’t, go to the website (www.associationforindependentmanagers.org) and locate the “Team” tab. I think you’ll find it enlightening.

 

Answering Questions

Remember the questions listed in the first chapter? Let’s review them and offer the answers you need to know:

Is it incorporated? Is it an LLC, or what? The Association For Independent Managers, Inc.™ is a Florida Corporation, incorporated January, 1979. It’s operated as a not for profit organization since.

If so, where is it registered, what’s the state of origin? Florida.

What’s the legal name of the organization? Does it use any other names? The Association For Independent Managers, Inc.™ is the legal name. Acronyms have also been used in the past including “AFIM”, “AIM”.

How does it operate? What format is used? Do members have the right to a vote? According to the bylaws, the Association allows members to vote. In fact, there is a “Member Proxy” form included in the application materials.

Does it have bylaws or a constitution? Bylaws and they’re posted on the Association’s website (www.associationforindependentmanagers.org

Is there a Board of Directors or other governing body? Yes, a Board of Directors.

Is it filed in all states where it does business? Yes, the Association uses a legal services company to assist with this compliance issue.

Does it hold a valid Certificate of Authority in those states? Yes, same as above.

Does it have the policy for any insurance it sells? Yes.

If not, does it have the valid paperwork which makes it legal? Yes, it’s on file at the Home Office.

 

Course Study Questions:

1. What is the full, legal name of the Association?

2. In what year was it incorporated?

3. Where was it incorporated?

4. Who is the Founder?

5. What is the official Association website?

6. Where can you have your customers/members log into where they can share the website offerings with their family, friends, neighbors, etc.?

7. What’s the Newsletter’s website?

8. List at least 5 examples of misrepresentation with respect to the Association in particular and association business in general.

9. Where would you go to verify whether or not an association was filed with a state?

10. How has “AIM” been misused?

11. What does “CBM” stand for?

12. Name at least 2 areas of expertise that the CBM program would cover.

13. Who would you expect to become a member of the Association?

14. What is a Certificate of Authority?

15. How has the Association been misrepresented in the past (list three ways)?

16. How have insurance carriers’ names been misrepresented?

17. Could you be dragged into court due to misrepresentation?

18. How important is the word, “of”?

19. What is found at www.sunbiz.org?

20. If states need revenue, what’s one way they can obtain it that might affect you?

21. List 5 red flags of a potentially bogus program.

22. Should a selling website be glitzy or compliant in nature?

23. What is the Association’s web address?

24. What can you find if you click on the “Team” tab?

25. What does AFIM stand for with regards to the Association?

Chapter 12

Other Important Information

 

Association Requirements

Associations have certain requirements which they are expected to meet. These requirements differ between states but most states require a Certificate of Authority which is initially filed and then renewed on an annual basis. This certificate allows a business access to residents of various states. What this means is that, as a business or venture (association in this instance), the business may legally operate, have legal service served upon it (some states require a resident office there for purposes of legal service), plus, the regulators within the states need to have a way in which to contact your organization so a known address and contact information is also filed and kept up to date. Again, these are requirements and each state has their own specific requirements. Perhaps you never thought of it in this manner but this is how business is legally and ethically conducted within various states.

Then, you have regulators within each state. These are state appointed regulators who actually regulate the insurance and association industries (plus others). Rather than act alone, they rely upon the laws, rules, and statutes which are produced by each state’s Legislature. As a result, these individuals always have authority as well as valid reasons for doing things in such a fashion which seems, at least to the uneducated person, “their way”. In reality however, they must follow statute, rule, and law. Since they’re regulators who have specific job descriptions, they’re also in the business of making certain that everyone else does too. At least they do it for any business which is domiciled in their state or actively doing business there. And, well they ought to! After all, they exist to protect and serve the needs of the residents of their respective states and that’s the way it ought to be. If you become an offense to the law, you will be corrected.

 

Website Issues

Then, there are website issues. Each state is the same as all the others when it comes to what you can legally post. Insurance carriers, DMPO’s, and even associations all have their own statutes to follow. As a result, only approved websites and material can be posted. This is where bogus organizations fall down. Since their main focus is selling, many are purposely vague in offering the proper information. This is a red flag to regulators. DMPO’s, the carriers themselves, regulators and others help keep the compliance and accuracy within approved websites.

Regulators can and do regulate what can be posted on a website. If certain words are used which sound like insurance but they aren’t intended to be utilized to sell insurance, then regulators automatically know that those are not authorized websites. Again, only certain words are approved for use. If you don’t know what they are, the Association offers training in the form of these courses so that you may know. The goal? It’s always to help inform the public and not misrepresent or misinform anyone.

For instance, if you sell a discount drug card and use the word “co-pay”, you’re using an insurance term to describe a non insurance product and it’s illegal to do that in many states. If someone’s going to enroll, that’s usually an insurance term. But, if you don’t know the difference and you like to “cut and paste” words into websites, flyers, or brochures, then you’re certain to get yourself into trouble.

Rules and regulations keep associations, organizations, businesses, insurance carriers, agents and brokers, etc. on their toes and compliant. For those who attempt to sneak into a state, you often find rule and statute violations so that’s yet another red flag to consider. Where there’s smoke, there’s also fire.

 

Associations Come In Different “Flavors”

Associations come in various flavors and sizes. The best ones have many requirements. What might be required? Some have requirements for membership where you must jump through hoops and qualify for memberships while others target “air breathers”, that is, anyone who breathes the air. Let’s review some of the types or flavors of associations next.

Air Breather Associations, are those which were often created just to sell insurance and other “discount” type programs. Most offer no newsletter, no advice, no educational courses, no certifications, no ongoing programs, no tools and resources, and I think you get the idea. Anyone who has money to buy their stuff, qualifies for membership. Many of these organizations are being refused insurance products and several, even during the past year, have lost the ability to sell health insurance. Are they “wrong”? No, but they are a type of association.

Trade Associations require that you work within a certain industry. If you don’t work within that industry, some allow for you to be a supplier to the industry while others are very specific. More often than not, you cannot join if you aren’t in that type of business. You’re going to have to prove up your membership in many of these organizations so get ready to show a copy of a license or other certificate within your industry.

Professional Associations, such as the Association For Independent Managers, Inc.™, normally fall into several categories. Some are for CEO’s or business owners only. Others offer their memberships to a broader range of professionals within a broad based industry. Some offer memberships to those who own, manage, and/or work in a business environment. Then, within those categories, members are often offered education, assistance, resources, etc.

The Association For Independent Managers, Inc.™ is one of these types of associations. While it allows employees who work in a small business to join, the Association is also very proactive in helping an employee start a small or Home Based Business (HBB). In this fashion, the Association maintains its integrity as well as helps members to create for themselves, additional revenue streams.

Air Breather Associations (and we hate to capitalize that) usually have no special requirements except that you buy whatever they’re selling (insurance program, discount program, etc.). Some of these organizations aren’t really valid associations while others are. More often than not, an insurance carrier will not allow an “air breather” association to hold a valid policy. There can be problems with any type of organization but these types seem to attract the wrong kind of marketers. At least, that’s what the regulators have told us.

 

Good, Bad, And Ugly

Associations can be down right good, bad, or even ugly. That means their purpose is either legitimate or it’s not. They’re either compliant or they’re not. They were either created to sell insurance and/or discount programs or they weren’t. Get the picture?

Let’s look at those which are bad or ugly. You might know people who’ve operated in one or more of these ways:

A number of associations have circumvented laws, statutes, insurance code, common sense and good judgment. They don’t have a Certificate of Authority and haven’t been approved to sell insurance by their state’s department of insurance. Some have done things which are unlawful, tainted, questionable, etc. The problem is that they haven’t been found out yet. Just wait.

 

What You Need To Realize

This type of organization which circumvents the right way of doing things, often includes methods which deceive Brokers as well as the general public in its scheme to defraud. Defraud how? They accomplish this by making a sham out of an organization and by trying to look legitimate without having to be legitimate.

Many associations have no real function, no benefit to members, no services, etc. other than to sell something to others. In reality, they have no members, only insurance clients. These are the organizations which the regulators are now scrutinizing as never before. As a result, some exist because the wrong types of associations and the bogus associations and organizations are operational until they’re found out. Some times that takes a little while.

That’s because too many brokers believe they can represent these organizations as being legally operated when just the opposite might be true. Brokers can often be easily fooled because they’re trained to be compliant. When you, as a Broker are compliant to a company or organization more than you are written statutes, that’s when the trouble starts. The association industry needs to become more self-policing. That would benefit everyone—especially Brokers who are trying to stay out of trouble.

 

What To Know About Associations

Here are a few of the important things you need to know about associations in general. If you’re thinking of representing at least one, then you’ll definitely need this information:

1. Associations should be licensed properly, incorporated, and under some oversight of the states where they reside. This might include, but wouldn’t be limited to, state licensure, holding a Certificate of Authority, or some other designation which is required by their state (and others). If the organization performs Third Party Administrator functions, then it would have to be properly licensed (and in some instances, bonded) within the host state and others where it does association business.

2. Insurance carriers are now setting more stringent guidelines regarding associations which wish to market their insurance and providers who sell discount type programs are doing the same. Associations, according to their latest requirements, should have bylaws, a newsletter, member voting (if the structure permits it), and other earmarks of a valid organization. If not, they’re probably not legal entities unless their states verify that they are. It doesn’t matter what you and I think, it’s what the licensing and oversight bodies tell us important and legal that really is.

3. If they sell, promote, or endorse insurance products, associations should hold the policies of the plans they sell. If they don’t, they become more of an agency than an association. For instance, the Association For Independent Managers, Inc.™ holds a policy from AMLI (American Medical and Life Insurance company for a Limited Benefit Plan). AMLI is domiciled in the State of New York and is headquartered in New York City.

4. Associations should utilize the services of a licensed and bonded TPA (Third Party Administrator) for billing and collecting of dues and premiums. This is especially true when it comes to insured products. Many state regulators would want to see a valid TPA in place for various types of billing and collecting. You should too. If there’s a problem with a licensed and bonded entity, then there is recourse, If not, then you could become the target of a disgruntled association member’s wrath. This amounts to a liability shift from you to the TPA so don’t take things like billing and collecting for granted.

5. Many associations were created in order to sell insurance or discount programs. As a result, many of them are losing their insurance products because the carriers refuse to allow organizations or businesses created for insurance purposes to sell their products any longer. This is nothing new however. This trend has developed out of state insurance regulation. In the small group arena, it’s not legal to create a “group” in order to purchase insurance for a number of individuals who may not have been able to qualify or afford individual plans. We often refer to these associations as “air breather” associations because to qualify, all you have to do is breathe air.

6. There are trade associations and professional associations which differ from “air breather” associations. The Association For Independent Managers, Inc.™ is a professional association. If you are an employee, manager, or owner of a small business, you qualify. If you don’t own your own small business, the Association will facilitate helping you start your own home based business. That’s about as proactive as it gets.

7. If you sell a Limited Benefit Plan within the Association, you should be actually selling a membership which just happens to include a Limited Benefit Plan. This doesn’t often occur however. Many organizations sell health plans, discount plans, or other plans outright and the association membership is hidden either in very fine print or as an after thought in the application.

8. As a representative of the Association, you need to present it and sell it as a membership that includes a Limited Benefit Plan. Without the Association membership, a person could not purchase the Limited Benefit Plan from the Association…period! So, you aren’t selling insurance, you’re selling memberships and the regulators want to hear it that way.

 

Application to membership in the Association For Independent Managers, Inc.™

The application process used for anyone to become a member of the Association includes three parts. There are important reasons for doing it this way. It is important to learn and know these parts as well as the reasons why each exists:

Part A, Association App: Application to membership in the Association. This application is listed first for a valid reason. Without membership, nothing else is accessible. Unless you join first, you cannot access insurance, discounts, or other programs as a member. Since the goal isn’t to solicit the general public but to offer benefits to members, then the member application would be the first logical step.

a. This application needs to be filled out completely, NO EXCEPTIONS. If it’s not filled out completely, it will be returned and that means a person could miss a desired affective date.

b. A person’s email address is required so that they can receive the newsletter which informs them regarding their Association benefits. Putting in a “N/A” when a person has an email address is not acceptable. Putting in the Agent or Broker’s address instead, amounts to laziness and will not be tolerated. Go get the right email address.

c. Important announcements are made via the newsletter. So are offers, educational material, and other vital information. That’s why the email address is important. If something in the program changes, members need to know about it. The newsletter is that method of contact.

d. Beneficiary information is to be included on the application because of the Life Insurance which is included in some of the membership benefit packages.

Part B, Statement of Facts: Statement of facts about what a person is joining and purchasing. This means that when you sign up someone, they must state, in writing, that they understand specifically what they’re purchasing and what you’re selling them.

1. Why is this important? Unless you have this validation in writing, that a person understands specifically what you’re representing and selling them, you become less liable if some attempts to lie about what you told them later on. For example, some would lie regarding what you sold them in order to get a high claim paid.

2. It has been noted that people will often lie in order to get out of paying a high claim and you, the broker, become incidental. The fact that you have Errors and Omissions insurance makes you a target.

3. If you have a person’s signature that they understand what they’re buying and later they attempt to lie about it, you have a piece of paper which demonstrates that they were either lying when they enrolled, lying now, or both.

 

Part C, Insurance App: The Insurance Application. This must be filled out completely and accurately. Any willful mistake or omission, could result in a person being denied coverage whenever claims pop up. At that point, their premium portion of the membership could legally be returned and no coverage offered.

 

Course Study Questions:

1. Why can’t you use the word, “co-pay” along with selling a discount drug card?

2. What three steps are part of the Association’s application process when it comes to the Limited Benefit Plans?

3. If you represent the Association, are you selling insurance?  Please explain.

4. What’s an “air breather” association? Explain.

5. Is it legal to create an association for the purposes of selling insurance?

6. What’s a TPA?

7. Why is a TPA important? What about when it comes to insurance premiums?

8. What function should a TPA be performing for an association when there’s insurance sold through the auspices of the association?

9. How might a trade association differ from a professional association?

10. What was the purpose of this chapter?

Chapter 13

What’s Important

About The Association For Independent Managers, Inc.™

Since you are a representative of the Association, the Insurance Carrier, the Program Managers, and indirectly related to the TPA, here’s what you need to know:

1. You are a representative of the Association more than you are just selling a Limited Benefit Plan. You represent an organization which happens to have three membership benefit packages which include the Limited Benefit Plan. Regulators will view you as compliant unless you do something otherwise. Your character and conduct will also come into play. Here’s what related to our course:

a. You can also represent and sell memberships which include NON Insurance benefits, products and services. They do pay you a commission and allow you to sell something to a small business, employee, manager, or business owner. If you walk in, you ought to be able to walk out with some sort of sale, payment, etc. that enriches the customer as well as enriches you in the process. That’s only fair and the Association wishes to empower you for greater sales and success.

b. You will fill out Association appointment paperwork when you sign up to represent the Association and the Limited Benefit Plan. Please take that seriously. No appointments = no representing or selling. You cannot sell first and ask questions later. You must be appointed in order to represent the carrier and the Association.

c. As an Association rep, you can also represent organizations such as FNI or Free Networking International (see Association website under “Association Partners”) if you wish to become involved with them and their fine networking system. Programs such as those affiliated with the Association are often great lead generation sources.

2. You are not selling a health plan, health insurance, “mini med” or major medical plan within the Association’s benefit packages. You are selling a membership that may or may not include a Limited Medical Benefit Plan.

3. The health plan portion of the membership packages which include it, may be referred to accurately as a Limited Benefit Plan, Indemnity Plan, or Limited Medical Insurance, Limited Medical Benefit Plan, or coverage, but not “mini med”. States do not like the use of the term, “mini med” so don’t use it. That term is misleading.

4. Please utilize the right terminology or you could become guilty of misrepresentation in the eyes of any of your customers. The Association, or any DMPO can help you find the right terminology to use.

5. As an appointed representative of the Association, you have the opportunity to contact your customers on behalf of the Association as often as you need to. This can amount to additional sales and assistance for your customers who are now members of an organization which you are appointed to represent.

6. Get to know what’s included in each of the benefit packages. Approved material is included online and knowing the answers means you will have more sales.

7. Learn the various sections of the Association’s website. For instance, the bylaws are included on the Association’s website. See if you can find them. They’re important because they describe what the Association is, how it operates, and this is a valuable resource to you when being an educated rep. An uneducated rep comes across as being insincere an phony.

8. Read the newsletter. It’s called “DIRECTIONS” and it can also help your business if it offers you just one great idea. Normally, it’s got several.

9. Take advantage of Webinars, teleconferences, and other offerings by the Association. Again, they will help you become a better representative and make more sales which translates into greater success.

10. Become a member. Why? It’s difficult to answer someone’s question when it’s, “Well, have YOU joined?” No one likes a hypocrite and we’re not implying that you would be one if you didn’t join however, some of your customers might see it that way if you touted all of the great benefits but were not a member yourself.

11. The Association has a Basic Membership which Agents and Brokers can utilize. It costs just $10.00 per member, per month.

12. If you agree with us regarding the information above, welcome to the Association For Independent Managers, Inc.™!

 

Important Note

Association selling is really not that difficult. If you incorporate what’s legal, ethical, and moral, into your method of operation, then life will become much simpler and you won’t have to be looking back over your shoulder all of the time. When you learn the rules, what you can say and what you cannot, it becomes much simpler. Potential members appreciate hearing you discuss, intelligently, the association business. That gains their confidence and rightly so.

As you learn this material, there’s one great thing about it. You only have to learn it once. Most of what a professional Broker learns, is added to that fund of knowledge which is stored, like a computer, so that it can be accessed and delivered in a given moment. When you reach that level, you’ve become the professional that each of your customers wants you to be. It is then that you also become the type of Broker the Association wants to partner with.

 

Course Study Questions:

As a review from some of the previous chapters, this section will help you reach back into material that’s important to remember. See if you do.

1. What’s an “air breather” association?

2. How do “air breathers” differ from the Association?

3. What do most insurance companies look for in an association that wishes to market their products?

4. Why is a Certificate of Authority important?

5. What are the three parts of the Association’s application process?

6. How much is a Basic Membership to the Association?

7. What is “DIRECTIONS”?

8. What is a TPA?

9. Why is a TPA important?

10. Name three types of associations:

11. What is AMLI?

12. In what state is AMLI domiciled?

Chapter 14

DMPO Compliance

DMPO’s or Discount Medical Plan Organizations exist legally and are extremely compliant aggregators of discount and DMPO (discount health) oriented benefits and services. As a result, what they say, goes. Their suggestion is “the law”.

The following information was obtained and is shared with Brokers with the intent that they begin to see and understand the types of guidelines, statutes, and regulations which exist for a variety of non insurance offerings which exist and which are promoted by a limited number of DMPO’s nationally.

Compliance Disclosures often include print size, and wording. Here’s an example of what must accompany certain discount programs.

This material was obtained from New Benefits, Dallas, TX. It may not be shared, copied, or otherwise disseminated without prior, written approval from New Benefits. If you have any questions regarding this material, please contact the Program Managers and the Association. This is information that New Benefits sent to the Association for compliance purposes.

So, why does the Association want you to have this material? Let’s review.

The purpose of sharing this information is to help promote complete and total compliance with the DMPO. Unless Brokers and Agents understand this material and can explain it intelligently, they could be working AGAINST the Association, the DMPO, and the statutes and regulations within the several states that regulate such products. Unless you have access to this material, you will not be able to support or comply with it and that’s specifically why, as an appointed and licensed Broker with the Association, this material is placed into your hands. It is for Association use only. Here is what New Benefits lists along with this material:

CONFIDENTIAL and PROPRIETARY

Information contained herein is not intended as legal advice. Every company and their marketers should review the law and speak with their legal counsel to determine how State/Federal laws will affect them individually. This page is intended for information purposes only. Rev. 05/24/2010 JS

As appointed and licensed representatives of the Association, you will be held accountable for this material. Please abide by the terms and conditions listed above.

What’s Regulated

The following must be printed in the order they appear below on the first page of any printed advertising/marketing materials, websites, radio/television ads as well as applications and phone scripts (Telemarketing).

A. A header of “Disclosures,” 12pt font, is required. *To be placed above all disclosures in Florida only. Please note that the State of Florida is perhaps the most DMPO compliant state with regards to what’s required. When a DMPO works with an association to create a benefits package, the State of Florida (if the program is to be marketed there), requires higher standards and therefore you will note that in the following material.

B. This plan is NOT insurance, 14pt font BOLD, is required. (Required in all states). Please note that you will see this print on anything the Association uses where authorization and compliance are an issue.

C. This plan provides discounts at certain healthcare providers for medical services *Required on adv/marketing materials. (Required in all regulated states) 12pt font is required. Please note that this is a requirement for all approved and authorized DMPO offerings.

D. This plan does not make payments directly to the providers of medical services *Required on adv/marketing materials. (Required in all regulated states) 12pt font is required. Please note that this is important due to the fact that many consumers don’t readily understand the nature of DMPO offerings. Discount programs and insurance are entirely different products and wording such as this helps consumers understand that difference.

E. The plan member is obligated to pay for all healthcare services but will receive a discount from those healthcare providers who have contracted with the discount plan organization *Required on adv/marketing materials. (Required in all regulated states) 12pt font is required. Please note that D and E (see above) work to help consumers understand what they are and what they are not buying when they purchase a discount program of any type. In this instance, it’s a DMPO offering.

F. Disclosures pertaining to refund policies are not applicable to complimentary programs/benefits.

G. This discount card program contains a 30 day cancellation period. 12pt font BOLD (Required in FL)

H. FL, LA, MS, ND, OK, SC, SD and TX Residents: Member shall receive a full refund of membership fees, excluding registration fee, if membership is cancelled within the first 30 days after the effective date. (To be printed as written on all materials)

I. AR and TN Residents: A refund of all fees will be issued if membership is cancelled within the first 30 days. (To be printed as written on all materials)

J. MD Residents: The membership fee and one-time registration fee (minus $5.00) will be refunded if cancelled within the first 30 days and upon return of the discount card. (To be printed as written on all materials). 12pt font required.

K. MA Residents: The plan is not insurance coverage and does not meet the minimum creditable coverage requirements under M.G.L. c. 111M and 956 CMR 5.00.

L. Discount Medical Plan Organization: (the name of the DMPO goes here), Attn: Compliance Department, (address goes here), 12pt font is required. *Required on materials used in AK, CO, CT, FL, IN, LA, MA, MD, MO, MS, NV, ND, OK, SD, and TX. (NOTE: Approval must be granted by New Benefits prior to using its name as the Discount Medical Plan Organization)

M. Telephone number of Discount Medical Plan Organization: (Toll free number goes here) *Required on materials used in AK, CO, CT, IN, LA, MA, MD, MO, MS, NV, ND, OK, SC, SD, and WA. (NOTE: Approval must be granted by New Benefits prior to using its name as the Discount Medical Plan Organization)

N. Internet website address to obtain participating providers, (insert client website). *Required on adv/marketing materials and identification cards used in CT, FL, LA (12pt font), MA, MD, MO, MS, ND, OH, OK, SC, SD, TN, and WA.

O. The range of discounts for medical or ancillary services provided under the plan will vary depending on the type of provider and medical or ancillary service received. *Required on all materials used in MA, SC and SD.

P. The discount medical card program makes available, before purchase and upon request, a list of program providers, including the name, city, state, and specialty of each program provider located in the cardholder’s service area. *Required on adv/marketing materials/brochures used in IN.

Q. Refund Policies and program Terms & Conditions must be provided to a prospective member at the time of application. *To be provided at the time of application via a leaflet or placed on all applications used in MA, OH, SC and UT. See Section VI for verbiage.

R. If not selling in all states, the document must state either in which states you are selling or in which states your product is not available. *To be included on all marketing/advertising materials and applications. Example: Not available in MT, FL, SD, NV, UT, IL—OR—Available only in TX, OH, HI

S. Any image, program name or website address that implies a connection to the federal government (i.e., American flag, monuments, money, presidents, etc.) is subject to approval by CEO and Vice President Compliance of New Benefits. All marketing pieces with the approved image/language must contain the following disclosure: Not endorsed by the federal government.

Section II – Benefit Disclosures

Please note the following must be printed on applications, fulfillment and marketing materials, including: websites, TV commercials, telemarketing scripts and radio ads.

A. Hospital Discounts NOT available in MD and VT. 12pt font required

B. Travel Assist not available to OR, FL, CT, and WA residents, 12pt bold font required.

C. Pharmacy discounts are Not Insurance, and are Not Intended as a Substitute for Insurance *Required on materials used in MT.

D. The discount is only available at participating pharmacies. 10 pt bold font required. *Required on materials used in NH.

E. Dental Benefit is not available to VT residents.

F. Chiropractic Benefit is not available to VT residents.

G. Vision Benefit is not available to VT residents.

H. Physician Visit Benefit is not available to VT residents.

I. Long-Term Elder Care Benefit is not available to VT residents.

J. Discount Lab Work Benefit is not available to NJ, NY and RI residents

Aetna Dental Access® Disclosures

When a Discount Dental Program (from Aetna as the provider) are offered in a DMPO package, then this approved and authorized wording must be listed as follows:

K. Actual costs and savings vary by provider and geographical area. *To be used only when referencing the savings range for Aetna Dental Access®

L. According to the Aetna Enterprise Provider Database as of October 1, 2008. *To be used only when referencing the provider number for Aetna Dental Access®

M. The discount program provides access to the Aetna Dental Access® network. This network is administered by Aetna Life Insurance Company (ALIC). Neither ALIC nor any of its affiliates offers or administers the discount program. Neither ALIC nor any of its affiliates is an affiliate, agent, representative or employee of discount program. Dental providers are independent contractors and not employees or agents of ALIC or its affiliates. ALIC does not provide dental care or treatment and is not responsible for outcomes. *To be used only when referencing Aetna Dental Access®

TelaDoc™ Disclaimers

Notice that TelaDoc is a trademarked name, hence the ™ listing here. In addition, since the program has certain listings which must accompany it, please be familiar with the material which is provided below. Disclaimers shall be listed as follows:

TelaDoc does not replace the primary care physician. TelaDoc is not available in Oklahoma. TelaDoc does not guarantee that a prescription will be written and operates subject to state regulations. TelaDoc does not prescribe DEA controlled substances. TelaDoc physicians reserve the right to deny care for potential misuse of services. TelaDoc, Inc. © 2002-2010. (First mention of TelaDoc must be trademarked on all marketing materials.)

Consult A Doctor™ Disclosures

O. Consult A DoctorTM physicians do not prescribe controlled medications.

Consult A DoctorTM is not insurance.

Consult A DoctorTM does not replace your primary care physician.

Section III – Applications

Please be aware of the following approved and authorized material. It’s intended to keep quality control, compliance, and clarity in the forms offered by the Association and any other organization utilizing the DMPO offerings.

A. A unique form number on the bottom left corner. *To be placed on every hardcopy application, online application, phone script and television script. Form numbers must be entirely numeric or alpha-numeric.

B. A header of “Discount Medical Plan Application,” 12pt font on all applications. (hard copy or online) *To be placed only on materials used in Florida, but NB recommends nationwide usage.

C. Disclosures needed for applications/scripts. Please see Section I (above) – Letters B, F, G, H, I, J, K, P, and Q. *To be placed on applications/scripts depending on marketed states.

D. I understand, I agree, I accept, or any other type of two-party language binding the member and imposing requirements is NOT allowed. You may state such terms and conditions. However, you cannot bind the member to such terms and conditions. *FL ONLY.

E. Social Security Numbers cannot be a required field and cannot be used as a member ID number. If you are using the SS# as an identifier and would like to submit to New Benefits for cross reference, this information is stored in a separate field. If you do not send a “member ID”, New Benefits will generate a number to be used for the membership card.

F. Discount medical products may not be priced over $30 in FL.

G. One-time application or processing fees cannot exceed $30 in FL.

H. One-time registration or processing fees cannot exceed $30 in OH.

I. One-time application or processing fees cannot exceed $25 in SD.

J. One-time application or processing fees cannot exceed $50 in ND.

K. One-time application or processing fees cannot exceed $30 in SC.

L. One-time application or processing fees cannot exceed $60 in TX.

M. One-time application or processing fees cannot exceed $30 in OR.

N. One-time application or processing fees cannot exceed $30 in WA.

O. One-time application or processing fees cannot exceed $30 in IL.

P. All benefits must be listed out on the application form along with packages and pricing.

Q. Refund Policies and program Terms & Conditions must be provided to a prospective member at the time of application. *To be provided at the time of application via a leaflet or placed on all applications/telephonic scripts used in SC and OH. See Section VI for verbiage.

Section IV - Alternate verbiage for Insurance terms

The following lists wording which could be used in place of insurance terms when referring to non insurance benefits. Too often, Brokers use “co-pay”, “deductible” or even “coverage” or “covered” and other such terms meant only for insurance, when they are discussing discount programs with consumers. Please be aware of this as a potential problem and learn to use alternate verbiage as follows:

* No health restrictions

* Easy to use

* Use immediately when you receive your card

* Begin saving as soon as you receive your card

* No paperwork, you pay the discounted amount at the time of your visit

* Use the card as many times as needed

* Present your card and save

* One membership for the whole family

* Register or join *To replace “enroll”

Section V - Insurance terms NOT allowed

Please note the words or phrases that are considered insurance terms are at the discretion of the state regulators.

* Covered, coverage

* Pre-existing conditions

* Deductibles

* Co-pays, co-payments

* Premiums

* Claim Forms

* “Health Plan,” (MAY be able to use Health Discount Plan)

* Cap or maximum

* Waiting period

* “Up to,” must include a minimum and maximum savings range

* Enroll

* Comprehensive

* Guaranteed issue

* PPO or PPO Network

* Preferred provider organization

* “Health Care Savings Plan” may not be used to describe discount medical plans

* Any wording deemed misleading, deceptive or fraudulent, or which is commonly associated with the business of insurance, which is determined at the discretion of state regulators

* “Insurance” may only be used as a disclaimer of any relationship between discount medical plan organization benefits and insurance

Section VI – Terms & Conditions and Refund Policy

The following Terms & Conditions are included in fulfillment materials. South Carolina, Ohio, and Utah members must receive a copy of the Terms & Conditions with the Refund Policy at the time of application.

1. Member is defined as primary member, spouse, and all legal dependents. All legal dependents are automatically registered and no additional registration is required.

2. At any time, a participating professional may be eliminated from the respective network in which they are associated.

3. Companies providing benefits and discounts in this program are not a licensed insurer, health maintenance organization, or other underwriter of health care services. No portion of any provider’s fees will be reimbursed or otherwise paid.

4. The discounts contained herein may not be used in conjunction with any other discount plan or program. All listed or quoted prices are current prices from participating providers and subject to change without notice. From time to time, certain providers may offer products and/or services to the general public at prices lower than the discounted prices available through this program. In such event, members will be charged the lowest price.

5. Providers are subject to change without notice and programs may vary in some states. This is a discount membership program only, not insurance, and may be discontinued or modified at anytime. You will receive notice if plan is discontinued or materially modified.

6. Savings are based upon the provider’s normal fees. Actual savings will vary depending upon location and specific services or products purchased.

7. This program is a referral and discount plan and does not warrant professional services, nor is it responsible for the quality of care received. This program makes no warranties express or implied concerning services or care provided.

8. Companies providing benefits and discounts in this program are not licensed to provide and do not provide medical services or items to individuals. Providers contracted by each network associated with this program are solely responsible for the professional advice and treatment rendered to members and each company disclaims any liability with respect to such matters.

9. Refund Policy and 30-day Money Back Guarantee: If you cancel for any reason within 30 days after the effective date, you will receive a full refund of paid membership fees, excluding the one-time application fee.

Note: This contract is not covered by any life and health guarantee association.

Conclusion:

You have concluded the first course for Brokers. There are more and each is designed to help you become a better and more accurate and compliant Agent or Broker.