Police have arrested 11 people suspected to be connected with a syndicated insurance fraud.
Eight men and three women were arrested at several locations yesterday. Four men and a woman, aged 31 to 50, were today charged with conspiracy to defraud and will appear in Eastern Magistracy tomorrow. The remaining six have been released on bail.
Police inquiries found that between 2001 and 2004, a number of licensed insurance brokerage firms were set up to introduce clients to a few well-known insurance companies. In return, they pay the brokerages lump-sum commissions ranging from 100% to 138% of the annual premium.
The brokers were under a written contractual obligation to "clawback" specified percentages of commissions if the new policyholders stopped their premium payment instalments within a certain period of time ranging from 12 to 19 months of the policy subscription.
$166 million paid out
Since the scam started in 2001, over 10,000 new clients have been introduced through the brokerage firms with a total of $166 million being paid.
Since 2003, the proportion of these clients who stopped paying the premiums began to rise, leaving the brokerages liable to pay the "clawback" percentage to the insurance companies.
Between last June and September, the brokerages began to close down, and the insurance companies were left with outstanding clawback fees of $48 million.
Police found the brokers were linked behind and such insurance policies were often given as prizes in lucky draws, or as staff benefits in recruitment. Premiums of the majority of "clients" were settled by the brokerages while the insurance companies were kept in the dark.
Police urge people to beware of anyone offering insurance services for free or as part of an employment package. If in doubt, they are advised to consult the insurance companies concerned or call Police on 2860 5013 or 2860 4740.
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