Consumer eViews

Volume 1, Number 15, April 12, 2004

Unauthorized insurance entities have left more than 30,000 Floridians with millions of dollars in unpaid claims.  It is a problem that has occurred in most other states as well, but Florida has been recognized as a leader in cracking down on these rogue entities and for its highly recognized “Verify Before You Buy” public education campaign. 

The United States General Accounting Office earlier this year asked Florida regulators to provide testimony to Congress about the growing problem of illegitimate insurance.  The GAO recently issued a report that in large part was based on information provided by Florida. The report can be found at

I cannot state strongly enough how critical it is for consumers and agents to be diligent about investigating an insurance plan before buying.  While the Department of Financial Services and the Office of Insurance Regulation have been aggressive about shutting down these bogus operations – issuing cease and desist orders against more than 200 entities, marketing representatives and insurance agents since February 2001 – consumers must provide their own first line of defense.  Too often, it is only after employers and consumers have accumulated unpaid claims that the problem comes to our attention. 

To verify licensure of an agent or insurance plan, go to and click on the icon “Are you covered?” or call our Consumer Helpline at 1-800-342-2762. 

In this issue of Consumer eViews, you will find a warning about to employers to be cautious if approached to set up a single-employer trust document that requires sending financial contributions to an out-of-state bank account.  The single-employer trust concept can be a legitimate option, but regulators suspect that single-employer trusts may be the newest vehicle used in an attempt to scam employers struggling to find affordable coverage for their employees. 

If an insurance entity is not licensed by the state, regulators will be limited in its ability to help with unpaid claims or recovery of premiums.  Most important to remember, if it sounds too good to be true, it probably is. 

Know what you’re getting.  Verify Before you Buy.

-- Tom Gallagher


The Bureau of Unclaimed Property is expecting heavy website traffic and increasing numbers of phone calls following last Friday’s broadcast of Dateline NBC.  Friday’s Dateline featured a look at Unclaimed Property programs nationwide.  Florida’s inquiries frequently double after similar stories, with thousands of Floridians going online or calling to search for unclaimed property. 

“Searching for lost treasure isn’t just for adventurers and explorers,” said Chief Financial Officer Tom Gallagher, who administers Florida’s unclaimed property program.  “Floridians could be a mouse click or a phone call away from discovering lost or forgotten treasure.” 

 The Department’s Bureau of Unclaimed Property is currently holding approximately $977 million belonging to more than 4 million Floridians, and these numbers are growing.  The department urges Floridians to search the state’s online database of unclaimed property at to find out if the department is holding cash or property belonging to them.  Floridians may also call 1-88-VALUABLE. 

The department has returned nearly $75 million to Floridians since July 2003.  Most of the property comes from dormant accounts in financial institutions, deposits paid to utility companies, insurance premium refunds, safe deposit boxes and trust holdings.  In addition to cash and securities, the state’s holdings include property such as watches, jewelry, coins, stamps and historical items. 

“We have Spanish doubloons, fine diamonds, rare autographed baseball cards and much more,” Gallagher said.  “Florida is searching for the owners, but if they can’t be found, the state auctions these items to the highest bidder to benefit public education.”

 Unclaimed property held by the state is deposited into the State School Trust Fund until it is claimed by the rightful owner.  Items from abandoned safe deposit boxes are auctioned annually, but the proceeds are always available for the owners to collect.  Last year’s auction yielded approximately $500,000 to benefit public education.


Florida’s Chief Financial Officer Tom Gallagher is alerting employers to use caution when considering setting up a health benefit plan through a Single Employer Trust (SET) document that requires sending financial contributions to an out-of-state bank account.   Florida consumers have been victimized by such plans, including the Meridian Benefit Plan that is now in federal bankruptcy in New Jersey.

Out-of-state plans and bank accounts can leave employers vulnerable to fraud, and can leave state regulators with very few options for helping with recovery.  In the case of Meridian Benefit, marketers also claimed to have re-insurance or stop loss coverage when they did not.

“A single-employer trust may appear to offer substantial benefits and savings, but they are complex arrangements that can be rife with financial risk,” said Gallagher, who oversees the Department of Financial Services.  “With any insurance or financial transaction, it is imperative to verify before you buy.  Remember, if it sounds too good to be true, it probably is.”

Since February 2001, more than 200 unauthorized insurance entities, marketers, insurance agents and other individuals have been ordered to stop selling fraudulent, unauthorized insurance in Florida.  The Department recognizes that the single-employer trust concept can be a legitimate option, but regulators suspect that single-employer trusts may be the newest vehicle used in an attempt to scam employers struggling to find affordable coverage for their employees.

An employer approached to buy this type of plan will be told it is an Employee Retirement Income Security Act (ERISA) qualified plan regulated by the U.S. Department of Labor.  To implement the trust, the employer is asked to sign a standardized document, then is billed monthly for a financial contribution deposited in an out-of-state custodial bank account.  The monthly premiums, or contributions, are paid into a custodial bank account that is supposed to pay medical claims and buy reinsurance or stop-loss insurance to cover costs in excess of the account balance.          

Although there may be an accounting of each employer’s contributions, there is a risk that funds that are supposed to be in separate custodial accounts are being co-mingled. 
Employers and their employees should consider the following before establishing a single-employer trust plan:

  • Is the purported insurance, reinsurance or stop-loss insurance company approved in Florida? 
  • Even if the insurer is authorized in Florida, is it actually providing the insurance coverage? 
  • Have legitimate policies actually been issued and are they still in force? 
  • Is the monthly contribution reflective of the advertised health benefits?  Is the offer too good to be true? 
  • What due diligence has been performed and is this documented?  Well-intentioned agents and individuals have been misled by some of these plans.
  • What is the track record of the plan administrator?  How long has it operated and does it pay claims, both the big and the small, in a timely basis? 
  • Is the plan administrator willing to provide its certified and audited financial statements?
  • Has any state insurance department or the U.S. Department of Labor taken action against the plan administrator, its principals, or the individual that is soliciting you?
  • As to other employer plans that the plan administrator is already administering, are required ERISA filings being made with the U.S. Department of Labor and the Internal Revenue Service?  Contact the U.S. Department of Labor at or call 1-866-444-3272.
  • As to the establishment of an out of state custodial bank account, what due diligence has been performed and is it documented?  How do these bank accounts truly work, who has control over them, and are there questions as to whether existing employers’ bank accounts have been misused?

For more information or to find out if an insurance company or agent is authorized to transact in Florida, log on to or call the Department of Financial Services Consumer Helpline at 1-800-342-2762.                                        


Florida’s Chief Financial Officer Tom Gallagher has warned consumers to beware of unsolicited e-mails promising an opportunity to get rich quick, but which are nothing more than an attempt to drain unsuspecting consumers’ bank accounts.

Recipients of these e-mails are told that the sender is either a high-ranking government official or the close relative of a high-ranking government official from a developing country. As a result of some financial miscalculation, the sender has millions of dollars languishing in a bank account that cannot be accessed without the recipient's assistance.  In return for this assistance, the recipient is promised a portion of the funds, usually 20 percent. All the recipient has to do is demonstrate their good faith by either depositing a sum of money in a bank account (which the sender can access) or by faxing company letterhead and information on the recipient's bank account. The sender then drains the bank account.  

While the majority of e-mails claim to originate from Nigeria, the source of the e-mails could just as easily come from anywhere else in the world. The Central Bank of Nigeria has issued a press statement subtitled "Don't be fooled! Many have lost money," which warns individuals not to be fooled by scam artists claiming to be associated with the Nigerian government. Because the operators of these scams usually reside outside of the country in which they are soliciting, prosecuting such cases is difficult, if not impossible.

“Any unsolicited e-mail which offers you an opportunity to get rich quick should be viewed with suspicion,” said Gallagher.  “People promoting fail-safe stock tips or easy access to locked-in funds often have their own get-rich-quick scheme - they get rich by taking your money.”

Gallagher said consumers should “verify before they buy,” a message he has promoted to urge consumers to determine that the company or individual they are dealing with is legitimate.  

Additional information can be found at the U.S. Secret Service’s website at Victims should contact the Secret Service’s Financial Crimes Division at 202-406-5850.  Consumers may also call the department’s toll free helpline at 1-800-342-2762.  

Florida Department of Financial Services'
Consumer Services HelpLine