Profits Are Where You Make Them
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Posted on April 29, 2022 by Barry Zalma
See the full video at https://rumble.com/v12wml6-true-crime-of-insurance-fraud-video-number-64.html and at
On his 50th birthday Louie concluded he was a failure. For thirty years he sold insurance to the public. For a $40 commission Louie would often spend hours explaining a tenants’ homeowners policy to a client. The next year, because another broker promised to save the client $5 in premiums, they did not renew and he received no commission.
Louie had always been a dedicated and faithful insurance broker. He put his clients’ interest above his own. If he could save them money (even if it would cost him a commission) he placed them with the least expensive insurer. In return he saw nothing but derision and disloyalty.
Louie decided to change his life now that he was middle-aged and a member of the AARP. Considering his small earnings, retirement at age sixty-five seemed almost impossible. He needed a means to make sufficient money in a short time to retire. His knowledge of insurance and his salesman’s understanding of the greed of his customers brought him a solution.
EMPLOY IV YOU was born.
Louie went to each of his commercial insurance clients with his plan. He explained that if they allowed him to become the employer of their employees, the cost savings in benefit plans would offset his fee. The business’ overall employee cost, he explained, would be less. He would charge each customer 3% of the gross salary of each employee and the actual cost of their benefits. For the 3% fee, he would file all employment forms and issue W-4 and W-2 forms; collect from his customers all employment taxes and pass them to the government; fill out all the forms and give each employee a “cafeteria” plan of benefits. The employees would be happy and the employers would be happy. The employer would have absolute control over the employees and Louie would merely be their titular employer.
Although the idea sounded too good to be true, 80% of his customers decided to take Louie up on the proposition.
EMPLOY IV YOU then applied for, and obtained, a workers’ compensation insurance policy for all of its employees. Louie, being a frugal man, advised the workers’ compensation insurer that he had 400 employees all working in a clerical capacity (the lowest workers’ compensation rate available).
Other than paying the premium that he obtained in advance from each of his clients, Louie’s only other expense was issuing pay checks. A payroll service charged him only $300 a month to issue all the checks and prepair the reports for him. He paid a bookkeeper only $8 an hour to take care of all the other bookkeeping requirements of his business. EMPLOY IV YOU made more profits in the first two months of business than Louie had made in any one of the last five years.
By the time Louie was fifty-five, he had invested his profits into a portfolio of stocks, bonds and mutual fund shares conservatively valued at $3,000,000. The earning from the portfolio would support Louie in comfort through his retirement.
EMPLOY IV YOU’s workers’ compensation insurer, on receiving Louie’s reports of earnings, reduced his premium each year. Louie used the “audits” to increase his profits for five years in a row.
On the fifth anniversary of the business, Louie’s 55th birthday, he decided he had made enough money and offered the business for sale to a legitimate employee leasing business. Louie took the $2,000,000 he received from the purchase, added to it the cash from the sale of his stock portfolio and moved it to Kingston, Jamaica.
He purchased a villa overlooking the sea and is living out his retirement happily.
ZALMA OPINION
Insurance fraud is an equal opportunity crime. It is committed by every race, religion, national origin, gender, sexual preference or occupation, even an insurance agent. It is a crime regardless of who commits the crime or how successful the criminal. A lack of investigation and unwarranted trust allowed Louie to successfully defraud multiple insures and those for whom he sold his services. When something, like Louie’s deal, seems to be too good to be true, it is.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected].
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Insurer’s Exclusion for Claims of Assault & Battery is Effective
Post 5250
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Bar Fight With Security is an Excluded Assault & Battery
In The Cincinnati Specialty Underwriters Insurance Company v. Mainline Private Security, LLC, et al., Civil Action No. 24-3871, United States District Court, E.D. Pennsylvania (December 16, 2025) two violent attacks occurred in Philadelphia involving young men, Eric Pope (who died) and Rishabh Abhyankar (who suffered catastrophic injuries). Both incidents involved security guards provided by Mainline Private Security, LLC (“Mainline”) at local bars. The estates of the victims sued the attackers, the bars, and Mainline for negligence and assault/battery. The insurer exhausted a special limit and then denied defense or indemnity to Mainline Private Security.
INSURANCE COVERAGE
Mainline had purchased a commercial ...
Marine Insurer May Dispose of Vessel to Avoid Waste
Post 5249
Read the full article at https://lnkd.in/gfn_UHdp, see the video at https://lnkd.in/gDWVccnr and at https://lnkd.in/gv9nsBqk, and https://zalma.com/blog plus more than 5200 posts.
In Western World Insurance Company v. The Estate Of Shawn Arsenault, No. 25-cv-13413-PGL, United States District Court, D. Massachusetts (December 17, 2025) the USDC was asked to resolve a marine insurance dispute after the sinking of the F/V Seahorse, a commercial fishing vessel, off Cape Cod on June 8, 2025. The vessel’s owner and operator, Shawn Arsenault, died in the incident.
Western World Insurance Company issued a hull insurance policy for the vessel. With no personal representative yet appointed for the estate, the insurer cannot determine the proper payee for the insurance proceeds.
The insurer paid for the vessel’s recovery and removal, and the vessel is now with a salvage company, incurring substantial storage fees. The insurer determined the loss is covered under the ...
Marine Insurer May Dispose of Vessel to Avoid Waste
Post 5249
Read the full article at https://lnkd.in/gfn_UHdp, see the video at https://lnkd.in/gDWVccnr and at https://lnkd.in/gv9nsBqk, and https://zalma.com/blog plus more than 5200 posts.
In Western World Insurance Company v. The Estate Of Shawn Arsenault, No. 25-cv-13413-PGL, United States District Court, D. Massachusetts (December 17, 2025) the USDC was asked to resolve a marine insurance dispute after the sinking of the F/V Seahorse, a commercial fishing vessel, off Cape Cod on June 8, 2025. The vessel’s owner and operator, Shawn Arsenault, died in the incident.
Western World Insurance Company issued a hull insurance policy for the vessel. With no personal representative yet appointed for the estate, the insurer cannot determine the proper payee for the insurance proceeds.
The insurer paid for the vessel’s recovery and removal, and the vessel is now with a salvage company, incurring substantial storage fees. The insurer determined the loss is covered under the ...
Zalma’s Insurance Fraud Letter
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ZIFL Volume 29, Issue 24
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/
Zalma’s Insurance Fraud Letter
Merry Christmas & Happy Hannukah
Read the following Articles from the December 15, 2025 issue:
Read the full 19 page issue of ZIFL at ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
