Insurance Fraud: Beware of Misappropriation of Premiums

by Barry Zalma, Esq., CFE

Insurance Agent

James K. Sokolis, 56, of Spokane, Washington, pleaded guilty March 22, 2012 in United States District Court in Coeur d’Alene, Idaho to three counts of insurance fraud. According to the plea agreement, Sokolis, an ex-insurance agent who previously owned and operated Rockwood Insurance in Coeur d’Alene, sold his book of business in August 2010, and a new company hired Sokolis to work the book of business he sold to them until late January 2011.

During this time, Sokolis misappropriated clients’ premium payments by failing to purchase the policies paid for or failing to remit the entire premium entrusted to him to the insurance carrier. He stole a total of $356,629.46.

This case demonstrates the importance of going beyond merely trusting your insurance agent with your premium payments, but taking the time to verify for yourself that the insurance company issuing you the policy has actually received the entire premium and that your policy is active.  Failure to do so could result in you being held responsible for damages when your insurance company refuses to pay claims because they never received those payments and therefore never issued or renewed your insurance policy.

  • Confirm the credentials of your insurance agent. When you get a new insurance agent, check his record at your state’s Department of Insurance website. Be sure he/she has a valid license and no disciplinary actions against him/her.
  • Confirm the existence of your policy directly with your insurance company a week or so after paying your insurance agent for the premium, to ensure your policy has been paid and is active.
  • Make your payment payable to the insurance company, not the agent.

Insurance buyer: beware!


Barry Zalma, Esq., CFE, is a California attorney, insurance consultant and expert witness specializing in insurance issues including fraud. Mr. Zalma has also written a number of books and writes a free newsletter on insurance fraud. See his new program on insurance fraud, “Who Got Caught?” online at