DCBS Media Release

August 4, 2004
For More Information:
John Piper, 503-947-7213

Oregon fights phony insurance policies

SALEM – Phony insurance policies are on the rise in Oregon and nationwide, with unsuspecting consumers footing the bills for unpaid claims.

Paul Savory, a small business owner in Portland, was stuck with more than $12,000 in unpaid medical bills after purchasing health insurance coverage for himself and his employees through a company that collected premiums but failed to pay claims. Several of his employees also were forced to pay health-care costs out of their own pockets.

Unfortunately, they're not alone, says Oregon Insurance Administrator Joel Ario. Ario is joining state insurance regulators nationwide in a public awareness campaign that encourages consumers to "stop, call and confirm" before buying insurance.

Frank W. Abagnale, the retired master forger whose story was told in the movie "Catch Me If You Can," serves as national spokesperson for the campaign and appears in television and radio public service announcements.

"Fake insurance policies take a variety of forms," Ario says, "but they're almost always marketed to make you think you're buying insurance protection. The policy may say somewhere in the fine print that it's not insurance, but the seller wants you to believe you'll be covered by insurance if you file a claim."

Phony policies are a growing problem in all lines of insurance, especially health care. A federal Government Accountability Office (GAO) study recently found that 144 phony insurers sold bogus health insurance products to more than 200,000 policyholders between 2000 and 2002, resulting in $252 million in unpaid claims.

Older adults and small businesses targeted

Older adults and small businesses looking to reduce health insurance costs are frequent targets of fake insurers, according to Ario.

"Phony insurance may look like a good buy because it's typically much cheaper than legitimate policies," he says. "But that's because a bogus policy doesn't provide sufficient – if any – coverage when you need it."

The Insurance Division licenses insurers and must approve most insurance products sold in Oregon. Consumers can check the division's Company Search page to see if an insurance company is licensed to do business in Oregon.

Protecting yourself is easy

The best way to avoid problems is to buy insurance only from authorized insurance providers. Ario recommends looking for these three warning signs of phony insurance:

• Aggressive marketing and a high-pressure, "you must sign today" sales approaches with lots of fine print and disclaimers.
• Premiums that are far below the average price for comparable insurance products on the market.
• Few coverage limitations. If it sounds too good to be true, it probably is too good to be true.

• STOP before signing anything or writing a check
• CALL the Oregon Insurance Division at 503-947-7984 or 1-888-877-4894 (toll-free message line)
• CONFIRM if the company is legitimate and licensed to do business in Oregon.

"If consumers stop, call, and confirm before they buy insurance, they may avoid getting stuck with unpaid claims," Ario said. "They also can help us track down and take action against the con artists who sell fake insurance."