What should an agent do if they suspect fraudulent activity regarding a policy?

When an agent suspects fraudulent activity regarding a policy, the appropriate action is to report it to the Department of Insurance immediately. This is crucial because the Department has the authority and resources to investigate allegations of insurance fraud. Reporting promptly helps protect the integrity of the insurance system and ensures that potentially illicit activities are addressed in a timely manner.

Confronting the policyholder is not advisable, as this could escalate the situation or compromise the investigation. Ignoring the suspicions until there is significant evidence undermines the responsibility agents have to maintain ethical standards and protect against fraud. Although reporting to law enforcement may seem like a viable option, the initial step should be through the Department of Insurance, which is specifically equipped to handle these types of issues within the insurance sector.