Linda McHenry

Category: Insurance

Who Commits Insurance Fraud?
With estimates of insurance fraud exceeding $300 billion annually, most insurance agents should be asking themselves Who commits insurance fraud? If we understand the profile of both victims and perpetrators, we can better help prevent this crime.
Who Commits Insurance Fraud?
Depending upon who you talk to, you’ll receive a different explanation of what fraud is … and what it looks like. Legally, different definitions apply based on whether federal or state law applies, and the specific circumstances.
Generally, the following elements must be present for the crime of fraud to take place:
- A person must deliberately make a false statement
- That same person must have no concern for the well-being of the victim
- The victim believes the false statement made by the fraudster
- The victim decides and acts based on the belief that the false statement made by the fraudster is truthful
- The victim suffers harm because he or she acted upon the belief in the fraudster’s false statement
According to the Coalition Against Insurance Fraud, some of the most commonly committed types of insurance fraud include:
- Agents and insurers stealing premiums or selling phony insurance coverage
- Auto insurance scams such as deflating airbag schemes, staged car crashes, and cons committed by bandit tow truck drivers
- Bereavement scams involving life insurance that prey on individuals suffering the loss of a loved one
- Popular scams in the building trades include contractors who perform shoddy repairs and those who falsely claim to be licensed
- Long-term care and Medicare scams that target older adults and vulnerable seniors
- Workers’ compensation insurance invites a huge assortment of fraud in the form of fake injuries, malingering, and more
The Association of Certified Fraud Examiners (ACFE) defines fraud as follows:
“Fraud” is any activity that relies on deception in order to receive a gain. Fraud becomes a crime when it is a “knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment” (Black’s Law Dictionary).
Experts categorize fraudulent acts as either hard or soft:
When one or more individuals create an entirely fictitious scheme, they commit hard fraud. They craft the scam like a novel, with some schemes being complex and nuanced while others are amateurish. Staged auto accidents are the classic example of hard fraud in the insurance industry. For instance, fraudsters form a criminal network comprised of drivers, injured passengers, doctors, lawyers, tow truck drivers, and others. They choreograph the car crash and performed it in accordance with a script.
Afterwards, the bad actors submit medical bills and other receipts to the insurance company seeking “reimbursement” for actual, exaggerated, and phony injuries and damage. The fraud ring pays each participant dependent upon the role played in the scheme. Drivers and passengers receive the smallest amounts; doctors, lawyers, and ringleaders receive the greatest amounts.
Soft fraud is an opportunistic act. It takes place organically when the fraudster stumbles upon a situation and takes advantage of it. One of the most popular forms of soft insurance fraud is known as padding. This crime takes place after a legitimate loss occurs and the claimant submits a claim. Then, the claimant inflates the value of the damage or adds items to the list of damaged or stolen property that were not actually damaged or stolen.
The Victim and the Fraudster
Profile of a Fraud Victim
Most perpetrators of fraud seek personal gain. In many cases, they want money; however, they may also be looking to acquire property, power, or influence.
Research shows that most fraudsters choose their victims carefully, and based on certain traits. Clearly, the type of fraud committed influences the selection process. A fraudster wanting to swindle an insurance company will exhibit different behaviors than an insurance agent wanting to con a client will.
Generally speaking, fraudsters target victims in all age groups; however, they target people over age 50 are more often. Fraudsters view certain characteristics as favorable, such as being a risk-taker, impulsive, and inattentive. Possessing high levels of financial education and living with a chronic medical condition are also traits widely sought by fraudsters. In a majority of fraud cases, the victim actively participates in the crime, if unknowingly.
Profile of a Fraudster
The motive behind acts of fraud isn’t complex: Fraudsters simply want to receive a benefit. What sets them apart from the rest of us is that they’re willing to lie and break the law to get it.
I’ll talk about how fraudsters go about committing their crimes in the next section. Before I do, I’d like you to know that the ACFE has conducted extensive research and study into not only fraud but also the people who commit it. Their Profile of a Fraudster cites data from more than 2,000 cases of fraud, including:
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02/08/2026
No, It’s Not All About Price
The Fallacy of “It’s All About Price”
When a client states he can only spend $500, the subject is not all about price.
Oh, that’s what most people think the topic of conversation is. But it’s not.
I’m here to explain why people honestly and sincerely believe in this fallacy. I’m going to show you how you can accept your clients’ objections about price and also explain what the real topic of conversation is.
It’s Not All About Price, It’s Really About Value
I had the “it’s all about price” conversation last week during an insurance class I taught. Many students insisted their clients refuse to listen to advice about what policy or coverage to buy. They swore their clients simply want to purchase the least expensive policy available.
I believe that’s how the conversation often goes between these agents and their clients. I just don’t believe their clients really mean what they’re saying. When agents buy into this scenario, they’re actually handicapping themselves and their clients.
This story plays itself out in every business industry and consists of two foundational elements:
1. People who don’t understand what they’re buying focus on what they are familiar with: cost.
2. People who don’t know how to sell value have only one commodity to offer: price.
People who focus on price
do not understand The value a product holds.
This is true of both the buyer and the seller!
If a client says, “I can’t spend more than $500 a year,” we should accept and respect that statement. I don’t advocate for pressuring clients to spend more money than they have or are comfortable spending.
Some clients do truly have financial constraints. And you know what? Their financial situation is theirs. We’re not responsible for advising them about how to manage their money.
It’s our job to offer them the product that best meets their stated needs. It’s their job to state their needs and make the final decisions. In a sense, we’re professional matchmakers. We show clients the value in what they’re buying and help them spend their money wisely by matching a product to their needs.
Extolling the virtues of the product–whether it’s an insurance policy or a refrigerator–is NOT the best way to go. That’s telling, not showing.
Here’s a blog post I wrote that provides the details about Why Selling Based on Price is a Bad Idea.
Ask the Crucial Question
The best way to determine value is to allow the customer to do so. You can get the ball rolling by asking a single question:
What do you want to spend your $500 on?
I promise, it’s better for the client to realize on his own that he can’t answer the question because he doesn’t understand how the policy works. Much better than you spouting your superior knowledge and him feeling … inferior.
How will the client respond? With a deer-in-the-headlights look. Complete silence. Befuddlement. Or in a similar fashion–generally without words.
Why will he be so surprised? Because he’ll expect you to argue with him. To tell him he has to spend more than $500 to get a good policy. Or, at the very least, he’ll envision you jabbering insurance jargon.
In his wildest dreams, he will not suspect you’ll make him and what he wants the topic of conversation.
This eye-opener is the first step toward establishing value. You show the client you not only know how to listen, you also do it. Which means you care. Caring is value.
Next, the client will realize you just put him in the driver’s seat. More proof that you care. More value.
Although he’ll be driving, your client won’t know where to go. He’ll need you to navigate for him. So, he’ll say something like: Huh? What does that mean? or I don’t understand. A wiseguy, or someone who’s defensive might say: What the hell are you talking about?
Regardless, any of these responses launches you into the second step toward establishing value.
What Does Your Client Value?
In many cases, your client won’t have a clue about what he wants, needs, or holds dear. This is especially true when clients buy insurance because they’re forced to do so. Like by a mortgage company, the state workers’ compensation laws, or a fearful spouse.
Here are two non-insurance situations that clearly show how people value products differently.
#1.
Let’s say a brand-new smartphone costs $1,000 and is on sale for $500. One woman might think both prices are too high because she seldom uses her phone. She’ll opt for an entirely different model that costs $400.
Another woman might grab the phone that’s on sale, thrilled to take advantage of the 50% discount.
A third woman might not like the requirement to opt-in to a three-year contract to get the 50% discount. Instead, she’ll pay $1,200 upfront to buy a different model without a contract.
#2.
Assume the cost difference between a case of 1-ply and ultra soft toilet paper is $10. Most people will happily pay the extra money to pat their bottoms with clouds rather than sandpaper. However, a fellow with septic problems will tolerate the sandpaper if it helps him postpone having to install a new system that’ll cost him a minimum of $25,000.
Let’s get back to the critical question: What do you want to spend your $$ on?
Once your client finally answers the question, you say something along the lines of:
Insurance policies pay for certain types of claims. First, give me a list of the claims you want the policy to pay for. Next, I’ll tell you what coverages will pay for those claims, and I’ll give you the associated costs. Then, you tell me what coverages you want to spend your $500 on.
In some cases, $500 will be more than enough to cover the cost of what the client wants. If so, it’s a win-win: client gets what he wants and agent makes a sale to a satisfied customer.
In other cases, $500 won’t be nearly enough. If so, the agent can make this into a win-win for everyone by letting the client figure things out for himself.
Let the client prioritize the types of claims he wants to be covered. Let the client consider different amounts of coverage to raise or lower the associated costs. If he sees no value in a coverage or feature, he’ll kiss it goodbye. If he finds value in a particular coverage, he’ll be willing to spend more money.
Unless he doesn’t have the money. Admittedly, this happens. And in certain economies it happens a lot more than at other times. However, in my experience, it occurs far less often than not understanding value does.
Clearly, this is a simplified explanation. For a more detailed illustration about how to help clients determine value, check out What Do Clients Want?
No, It’s Not All About Price
We tend to make quick judgments about our clients and their needs. Here’s a final, classic example to illustrate my point:
The agent is writing auto insurance for his client, a family that consists of father, mother, and adult daughter. Each family member owns and insures his/her own vehicle on a separate policy.
When discussing the available coverages, the agent assumes Rental Reimbursement Coverage isn’t necessary. Why? Because if one of the vehicles becomes undrivable, the family still has two vehicles that are. Therefore, the agent suggests each family member save $50 per year (a total of $150) by NOT purchasing this coverage.
The problem: The agent assumed the clients’ primary concern is money rather than asking what their needs and priorities are. A family’s collective ownership of three vehicles does not automatically equate to all three vehicles being available whenever a family member needs a car.
Mom’s car may be used to commute back and forth to work … at a location 40 miles from home.
Dad’s car may have a standard transmission, and he’s the only family member who can drive a stick shift.
The daughter may be a single mother of three children under age five who absolutely MUST have a car available at all times.
Maybe the parents are retired and all too willing to let their daughter use one of their vehicles if hers is totaled in a car accident.
Regardless, our clients should decide what their needs are … and what value they place in the products we help them choose to buy. Because no, Virginia, it’s not all about price.
Feel free to share your comments and viewpoints below.
02/03/2026
Insurance Career Mentoring & Coaching
Insurance Mentoring & Coaching
Why Work with Me?
Do you think you might benefit from insurance mentoring & coaching? Would you like more clarity and support as you navigate the insurance industry? If so, you don’t have to face the journey alone.
I provide practical mentoring and coaching to insurance professionals that helps them communicate clearly, serve clients better, and build sustainable success.
You might be interested in my insurance mentoring & coaching services if:
- You’re new to the industry and want to master its complexity
- You simply want to elevate your expertise
- You’d like a sounding board to help you face the challenges of agency ownership, someone who isn’t a competitor
- You want to start your own agency and need guidance about the realities of independence
I tailor each relationship based on the individual’s unique role, needs, and goals. We’ll focus on you and the situations you face; I’ll provide real-world experience based on my firsthand knowledge of the industry.
Exclusive Content and Access to Mentoring Moments
I also provide free content and services to those enrolled in my membership community. In addition to the public posts on my blog and my YouTube channel, I regularly upload exclusive content for my members. You’ll have access to articles, videos, how-tos, and information shared by other insurance professionals. Recent content includes What Do Clients Want?, Why Use a Client Intake Form?, and downloadable forms such as Client Confirmation of Coverage.
For more information, check out the following video or visit the Membership page on my website. Once you join my membership community (there’s no cost for doing so), you’ll be taken to your Membership Dashboard. From there, you can access the exclusive content and request free mentoring services.
02/01/2026
30-Minute Training: Marketing Tips for Beginners
Marketing Tips for Beginners
Are you interested in what I consider the most important marketing tips to be?
A few years ago I wrote and presented a 30-minute workshop about marketing. Here’s the video for your viewing pleasure!
Feel free to share your comments below, as well as any advice or suggestions you’d like to add!
If you’re a writer or an insurance agent who’s interested in more tips, how-tos, and other valuable content and resources, why not consider joining my Membership community? There’s no cost to join and you’ll gain access to exclusive content, as well as Craft Chat and Mentoring Moments.

01/25/2026
Why Selling Based On Price is a Bad Idea
Why Selling on Price is a Bad Idea
Countless salespeople insist that selling based on price is the only way to go. They believe money is the primary basis upon which customers make purchases. And they believe that if they don’t offer the lowest price in the marketplace–or darned close to it–they’re never going to succeed.
I don’t agree. And in this article I share not only why selling based on price is a bad idea but also what a better alternative is.
Don’t feel you have to take my word for it, either. Read any of the books written by Jeffrey Gitomer, such as The Sales Bible, The Little Red Book of Selling, and The Little Red Book of Sales Answers. Or check out Dale Carnegie’s How to Win Friends and Influence People.
The Mindset
When customers or prospects tell you they’re only interested in buying at the lowest, most competitive price, or if they state the maximum dollar amount they’ll consider spending, everyone’s focus zooms to money. The individual immediately takes control of the negotiation–but only if the salesperson buys into the mindset.
Understanding that price without context has no value changes the dynamic and actually allows the salesperson to take control. So, what does this phrase mean? Let me explain your customer’s mindset. He tells you:
- I need a refrigerator
- I don’t want to (or can’t) spend more than $500
On the surface, the customer’s focus is on his budget, which is fiscally sound behavior. But his focus doesn’t take into consideration anything else, such as how he values a refrigerator. Every customer values the product or service being purchased, regardless of his budget.
Let’s say you only have two refrigerators for sale under $1,000. The older, used fridge has a price tag of $250. It’s in good shape mechanically but it’s old and faded and a bit beat up. You also have a brand-new fridge that normally has a price tag of $1,200. However, because of serious exterior scratching and an ice-maker that doesn’t function, you’re offering it at half-price, or $600.
If you’re just an order-taker, you offer your customer the “cheaper” product. But if you’re a true salesperson, you know that’s a bad idea. Why? Because you don’t know what the customer expects any refrigerator to do for him or why he wants to buy one.
Determining Value
Why did the customer come to your appliance store? He could have shopped online and made a purchase without the interaction of a salesperson. Yet he came to you.
Why?
Because he wants your help. Ask questions–this is the first way you can provide assistance and show that you find the customer important (i.e., he’s valued). Questions like:
- Why are you in the market for a fridge?
- Aside from having a budget of $500, what are your requirements and needs:
  - What size does the refrigerator need to be? There’s no point in considering fridges that won’t fit in the space at home.
  - Do you want a new or used refrigerator?
  - What particular features do you want, or not want?
- What else should I know?
Then, when you listen to the answers, you reinforce your concern for the customer and his needs. When he gives you his answers (in other words, he states his needs and wishes), you restate them and explain about supply and demand. How appliances in his price range are few and far between in the current economy. However, you do have two refrigerators that cost less than $1,000.
You then describe both items and let him determine the value he finds in each appliance.
- If the older, less expensive fridge is too large for the customer’s space, it holds $0 value regardless of the price tag. Ditto for the the new, more costly appliance.
- Is the customer bothered by the condition of the older, smaller fridge or the scratches, dents, and broken ice maker on the new one? Some people find no value in secondhand items. Other people find no value in “damaged goods.” What value does your customer find in each of these two refrigerators?
- Although the brand-new fridge costs $100 more than the man’s stated budget, the customer may find that a brand-new refrigerator, even with scratches, dents, and an inoperative ice maker, justifies spending $100 more than he’d originally intended. On the other hand, the $250 fridge must just be what he’s looking for. (Not to mention the $250 cash in his pocket after he buys it!)
Context is Everything
Remember: Price untethered to value has no context.
Said a different way: Price alone is just a number. It holds no meaning and no value … unless it’s associated with something else. That’s why selling based on price is a bad idea.
Over the years, many people met with me to discuss buying insurance. Some stated a budget upfront; most didn’t. For either type of customer, I could easily have picked random coverages out of thin air, along with random amounts of insurance, and then shown them a quote. Which would have illustrated price untethered to value.
Instead, I showed them a quote with all the coverages that were available at the highest amounts of insurance. Again, price untethered to value.
Yes, some people choked. And yes, others were stunned speechless. Which worked fine for me. I filled the silence by explaining that I knew nothing about them. Not about who they were, why they wanted to buy insurance, or what they wanted their policy to do for them. But I wanted to know.
I also explained that because my goal was to do the best job I could, I was offering them the most comprehensive insurance policy at the highest amount of coverage available. I showed them they were important to me.
Then, I asked them to give me a few minutes to tell me what they didn’t want and we removed the coverages and features that held no value to them. At the end of the process, my customers arrived at a price that met their needs because they determined the price themselves–and it was always based on value THEY identified THEMSELVES.
This very same process works in connection with all types of sales, in all industries, by all salespeople.
During any negotiation, customers prefer seeing the cost of any purchase go down rather than up. They also prefer having control.
I say: give it to them! Give them all the information that’s available and let them toss away what they decide isn’t worth their money.
Why Selling Based on Price is a Bad Idea
In a negotiation, the first person who mentions price loses.Why? Because that individual isn’t focused on the what or the why or the how. In other words, what the product can do for the buyer, why the buyer needs it, and how everything works.
- Customers seek out salespeople because they need help. They lack the product knowledge we have, the technical skill we’ve acquired, and certain abilities that only professionals in our field possess.
- During the negitiation process, customers are at a disadvantage … and they know it. Whether consciously or unconsciously, when they toss out a price requirement they do so in an attempt to control both the narrative and the outcome.
- Acknowledging a customer’s price requirements and then setting them aside temporarily to discuss value reinforces a salesperson’s ability and desire to help. Especially when the salesperson shows ALL the products/services that are available and encourages the customer to make ALL the decisions.
- When salespeople hop on board with only discussing price, they dismiss value … and genuine conversations about value.
Will you run across customers who simply won’t budge from a stated price-point? Absolutely. When that happens, you need to decide if you’ll sell to them based solely on price … or not.
I won’t … because those customers aren’t interested in how I can help them. They’re not interested in context or value–the what, why, and how. They’re only interested in placing an order.
Unfortunately for them, I’m not an order-taker; I’m a professional who offers value.
Which are you?
10/21/2025