Editor’s Note: This is from Molly Mulebrier, Phd, CPA, CLU, Jd., of Dime Box, Texas, contributing editor for this Weblog. This is based on a fictional character and is the first of a four part series.
As I approach retirement, after being in the insurance industry since 1973, primarily in health insurance for employer groups, I believe it is time to come clean with the employers whom I have scammed all these years. These confessions will surely pave the way for my safe passage through the pearly gates in lieu of the pergatory existance I truly deserve. Thank The Lord for the Forgiveness Doctrine which the Catholic church perfected many years ago.
It has been a fun ride with tremendous financial rewards. It has made me a millionaire several times over. And, I dont even have a college degree. A remarkable achievement it seems. But, it was only through deception, lying and cheating that I have been able to gain unreported riches at the expense of my clients. Bernie Madoff could have learned a lot from me. He is in prison, I am not.
My first job in the insurance industry was with a national health insurance company. I was a sales representative for them. I was assigned a territory that included a substantial book of business which I quickly learned I could prey upon with abandon. It was like being given a cookie jar with no adults in the room! With management’s active guidance and on-going and knowing approval, I became a sales star.
I quickly learned that when a renewal hit my desk, I could “override” the underwriter to my advantage. For example, if the renewal was for a political subdivision, I knew that any rate increase would trigger a Request for Bids scenario and my renewal would be known to all who attempted to bid and undercut my renewal. So, instead of the underwriter’s 15% renewal increase, I magically changed the renewal to a 32% increase, officially typed on a company letterhead. I was now in a win, win situation. I could not lose. My competition would come in 5% lower than my renewal, thinking they had a great bid. I would come in with a 23% increase and still have 8% in my pocket should negotiations with the employer become necessary. If I sold a higher rate increase than what the underwriter wanted, I became a darling of the underwriting department and future favors would come my way. And, if I really wanted to make myself look good to management, and put more bonus money in my pocket at the same time, I would advise the group “Look, my renewal came in at 32% but I got it down to 23% . At this point, there is not much more I can do here. But, if you were to buy a $10,000 term life policy on each employee, I can drop the renewal increase down to 19% with the difference going to pay for the group term life plan. So, you are getting a “free” group life plan for all your employees”. And, I would add “we can do this since term life is a very profitable product line and we use those profits to offset health losses within our group health business portfolio.”
I first did this on a very large public school district. Not only did I pocket about $4,000 in bonus money, I won a trip to Las Vegas too! I was living the high life, earning over $50,000 per year on average in the early 1970’s. Better things were yet to come.