Insurance Twisting

Posted May 9, 2016

Insurance companies’ acts of bad faith do not only include the refusal to pay out a valid claim. There are a multitude of other ways by which an insurance company can dishonestly or fraudulently take advantage of consumers. It is important to be careful in your transactions with insurance companies and their agents to avoid dishonesty and fraud. Only recently, a former Oklahoma insurance agent pleaded guilty to charges of defrauding clients of $505,126.43 through an illegal practice known as “twisting.”

Twisting

Twisting occurs when an insurance agent persuades a policyholder to surrender an existing permanent policy in one company, in order to then replace that policy with a policy from another company, to the detriment of the policyholder. For the surrender to constitute twisting, the insurance agent must make a misrepresentation or fraudulent or unfair comparison to the other policy to induce the client to surrender the policy or let it lapse.

Because there is generally a penalty for early termination of an insurance policy, the client loses money in the transaction. The agent, however, makes money by earning a commission on selling a new policy.

The Case

Gary Edward Hibbing, a former insurance agent and owner of Grand Lake Investments and Insurance, previously of Grove, Oklahoma, pleaded guilty on April 2 to two counts of wire fraud and two counts of unlawful monetary transactions in connection with his twisting scheme. His insurance practices had been the subject of a joint investigation by the Oklahoma Insurance Department’s Anti-Fraud Unit and the Internal Revenue Service–Criminal Investigation.

Hibbing admitted to lying to clients to persuade them to dump existing annuities and immediately purchase new policies. He purposely failed to inform clients of early termination penalties and gave false information to insurance companies to facilitate the fraud. The investigation revealed twisting in 80 different annuity policies from 2007 to 2013. Hibbing’s license had been revoked on March 4, 2013, but he continued to sell policies by signing another agent’s name in place of his own.

Sentencing is scheduled for July 12, and Hibbing faces up to 20 years’ imprisonment for the wire fraud charges and up to 10 years for unlawful monetary transactions. He also faces a judgment of criminal forfeiture in the amount of $505,126.43, the proceeds of his fraudulent scheme.

Contact Our Firm Today

If you believe that your insurance company may have defrauded you, you should seek out the advice of an experienced Oklahoma bad faith insurance attorney. Please contact our legal team at the Bennett Law Firm, at 405-272-0303, for a free initial consultation.