Insurance agent overstating premiums, pocketing the difference
My business owns a few hundred MF units in the southeast.  We recently completed a refi with agency debt for one of our properties, and the lender requires annual insurance premiums be paid in advance.  Our insurance agent sent an invoice to escrow that ended up being thousands more than the actual insurance premium.  I only caught the difference when I saw on the online portal of our insurer that the actual premium paid was significantly less than what was deducted on our settlement statement.  Is this a common practice by insurance agents?  I'm worried there could be many other instances where our agents have overstated the actual premium and are pocketing the difference.
[{"id": "hzicgmj", "text": "If true this is fraud. Lawyer up and sue. The insurance board will have that person hung up by their toes.", "replies": [], "depth": 1}, {"id": "hzimi6m", "text": "I'm guessing something else is happening here that you dont fully understand. Agents dont get paid directly to pocket the difference anyways, seems very odd.", "replies": [{"id": "hzin6hd", "text": "I typically pay my insurance company directly though online monthly payments.  It was this specific situation where we were required to pay 12 months in advance by the lender that the agent took the payment from escrow as part of closing, then paid on our behalf.  I just happened to notice the difference between the settlement stmt and what was said was paid in the online portal.  I think I know what happened- I'm just not sure if they're able to justify it on their end as some kind of \"transaction fee\".", "replies": [{"id": "hzio954", "text": "So there is a difference between the settlement statement number for insurance, and what was paid as you can see in your online portal.\n\nDo you know how Much the insurance agent actually took from escrow to pay this? The actual insurance amount due could have been less than listed on your settlement statement. So unless you have verified that the agent took out the whole amount from the escrow account, the difference could still be sitting in escrow. Sometimes there is a discount from insurers for paying a full year right away. \n\nIf the insurance agent submitted for payment in excess of what escrow had there would be a shortfall. This should be easy to clear up with a couple phone calls.", "replies": [{"id": "hzipx9m", "text": "That is correct.  The difference is a few thousand dollars.  Not the end of the world, but if it's shady, I can't do business with them anymore.  \n\nFrustrating part is more so with the refi.  The lender's underwriting uses the insurance figure given by the agent in the invoice.  So if you capitalize the that few thousand dollars at a 6-cap, it ends up being tens of thousands in lost refi proceeds.", "replies": [{"id": "hziqoi9", "text": "Hmmm, do you have a copy of the bid on the insurance cost other than the settlement statement? Like when you lined up the insurance company before closing, did they tell you how much it would cost?  It's very easy for the settlement statement to be incorrect compared to their actual originall cost they told you.", "replies": [{"id": "hzir1ba", "text": "Yeah, the invoice the agent sent during escrow (on their own letterhead) had the higher figure that went on the settlement stmt.  I already flagged it to them and they just got back to me saying it was a mistake, so they're cutting me a check for the difference.  I highly doubt they'd be writing me a check if I hadn't caught it though.", "replies": [{"id": "hzjaxb3", "text": "Nice, good outcome. I would bet it wasnt on purpose. Now if it happens again...maybe. good luck.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hzlbieo", "text": "As insurance agent with 10+ yrs of experience: 1. \u201cOvercharging\u201d is a big NO for agents. Check proposals, and make sure this extra charge is not simply a  broker fee and taxes. In many states, broker agents are allowed to charge fees, and you as insured must sign or at least initial that fee disclosure or full proposal which breaks down all charges. 2. It is possible that your agent had to write a new policy for you, and terminate prior policy mid term. Most commercial lines (which is usually a form used for MF) have minimum earned premium, plus all fees are fully earner if you request to bind coverage. Which means they could have billed your mortgage bank for premium owned for prior policy. \n\nPull your docs, remove sensitive info, post it here or in insurance related sub. I\u2019ll be happy to review and tell you what\u2019s going on.", "replies": [], "depth": 1}]