Point Insurance Appeals Arbella Cancellation At CAR

Today, Tuesday, September 12, 2017, at 1 p. m., the Market Review Committee of Commonwealth Automobile Reinsurers (CAR) will hear the cancellation appeal of Point Insurance (Point) from the June 29, 2017 notice of termination of Arbella’s limited servicing carrier agreement with Point for commercial auto business.

Arbella alleges Point has continued practices of cancelled Rapo & Jepsen Agency

Arbella seeks to cancel the exclusive representative producer contract that Point, the successor to Rapo & Jepsen, for allegedly continuing the fraud that had resulted in the termination of the Rapo & Jepsen contract. The owner of Point was an employee of Rapo & Jepsen who, while Arbella was fighting to cancel Rapo & Jepsen’s limited servicing carrier agreement, bought Rapo & Jepsen book of commercial auto and personal lines insurance and obtained an assignment from CAR to Arbella for a limited servicing agreement to write commercial auto insurance.

The allegations of Arbella are that Point has continued the practice of Rapo & Jepsen of writing unlicensed insureds by using sham corporations or businesses so Point can write a commercial auto policy. Arbella specifically alleges that Mr. Bruno Rozembarque, the owner of Point, as a former employee of the Rapo & Jepsen Agency, was “well aware that these were the very practices for which the Rapo & Jepsen Agency had his (sic) appointment terminated.”

To say the least, the relationship between Arbella and Point following this assumption of Rapo & Jepsen’s book of business has not been particularly harmonious. Point has filed a number of legal proceedings against Arbella in the short 15 months since it took over the agencies run by Rapo & Jepsen.

Arbella sends 500‑page cancellation notice alleging investigation shows continuing insurance fraud by Point

Arbella’s June 29 cancellation letter alleges Arbella’s investigation has revealed that Point has engaged in several fraudulent practices documented in the almost 500 pages attached to the cancellation letter including:

• Point represented, on several occasions, that licensed Massachusetts drivers would be operating the vehicles for whom commercial policies were applied when in fact, no validly licensed driver was going to operate the vehicle.
• Point has, on some occasions, advised applicants that did not have a valid Massachusetts license to find “anyone” with a Massachusetts license and fraudulently represent that the Massachusetts license holder would be operating the vehicle to be insured.
• Point has represented that the vehicle was owned by a business entity when it was not. Point has also represented that operators of the vehicles owned a business when they did not.
• Point has continued to commit premium fraud by advising operators that their insurance is cheaper when they represent that they have a business entity even though they do not.
• Point has fraudulently represented that individuals are employees of businesses when they are not.
• Point has advised insureds to continue to make fraudulent representations that they owned businesses which were originally made by the Rapo 85Jepsen Agency.
• Point has advised drivers that do not have a Massachusetts license or do not have businesses to make fraudulent representations in order to procure a commercial policy.

Arbella alleges Point well aware of the illegality of the practices

In its termination letter, Arbella further asserted that when Point acquired the Rapo and Jepsen book of business in July 2016, Point asked for and received guidelines and procedures from Arbella to weed out Arbella policies Rapo & Jepsen obtained by fraudulent representations. But, since that time, per Arbella, Point has repeatedly failed to follow those guidelines or, worse, has used false information to fraudulently satisfy the guidelines

Additionally, Arbella alleges that Mr. Rozembarque and one of his employees met with Arbella investigators in March 2017 and made several false statements regarding practices used by Point that Arbella documents in its cancellation attachments to fraudulently obtain commercial insurance for in eligible applicants.

Rule violations with examples round out Arbella’s case against Point

Arbella’s main rule violations for cancelling Points contracts are alleged violations of CAR Rules14 B.1.c., 14 B.1.e, and 14 B.1.k a, asserting respectively:

• Point has not refrained from engaging in fraudulent activity in connection with the business of Motor Vehicle Insurance;
• Point has failed to provide a reasonable and good faith effort to verify the information provided by the applicant, including rating and licensing data;
• Point has failed to notify the Servicing Carrier of suspected fraud

To back up its allegations in Arbella’s cancellation, Arbella attached documentary evidence related to 15 insureds and applicants for insurance with a transcript of an interview with each by an Arbella SIU investigator, Edward Spellman.

The following listing of allegedly fraudulent acts by Point from Arbella’s submission demonstrates, according to Arbella, Point has continued to engage in fraudulent activity, failed to notify Arbella, as its Servicing Carrier, of suspected fraud and failed to provide a good faith effort to verify the information provided by the applicant:

The cancellation documentation and submission by Arbella allege that Point engaged in fraudulent activities to obtain insurance for the following insureds by the methods listed under each insured’s name:

• Safe Stone Masonry.

“Point fraudulently continued to represent this was a commercial use and it is not. In addition, Point instructed the applicant to find someone with a Massachusetts license that he could use to procure a policy when in fact, Point knew that the licensee was not an employee or driver of the vehicle to be insured.”

• Chun Restaurant Maintenance

“Point fraudulently represented on a renewal application that the applicant was a business; it is not.”

• Pilar’s Catering

“Point fraudulently represented that Mr. Obergon, the operator on this Rapo & Jepsen policy, owned a business which he does not own. When the policy was non-renewed, Point submitted an application for a new policy making the same fraudulent claims as has been made in the initial application which was non-renewed.”

• Nadege Jean Claude / Nadege Jewelry

“When Arbella non-renewed a policy applied for by Rapo & Jepsen because it was not eligible for a commercial policy, Point simply submitted an application for a new policy fraudulently representing that the applicant was a jewelry business. In fact, Ms. Jean Claude has never owned a jewelry business and responded to that effect on the renewal questionnaire. Point, however, submitted a new policy application restating the false representations made by Rapo & Jepsen- that Ms. Jean Claude was the owner of a jewelry store.”

• Edilson Lopez/Lopez Iron Works

“When this Rapo & Jepsen policy came up for renewal, Mr. Lopez told Leandro at Point that he did not have an iron works business as was represented in the original application submitted by Rapo & Jepsen. Nonetheless, Leandro submitted a fraudulent renewal application claiming that Mr. Lopez was in the Iron Works business with two employees.”

• JSantana Plastering/Miriam Beurelian

“Because Mr. Santana has only a Brazilian operator’s license, Point employees fraudulently represented that Mr. Santana’s girlfriend was an employee and driver of the vehicle used by his plastering business.”

• Darwin Colindres/ Coll Handyman

“Although Point employees were informed by Mr. Colindres that he did not own a business as had been fraudulently represented in the original policy application submitted on his behalf by Rapo & Jepsen, they submitted a renewal application continuing to represent that he had his own business.”

• Jao Lima/ W and J Painting Corporation

“When this policy came up for renewal, an employee of the Point Office in Boston contacted Mr. lima and instructed Mr. Lima. to go to Point’s Marlborough office for further assistance. There, he was advised by Point employee, Christina Galvin, to find “anyone with a Massachusetts license so that an application which fraudulently represented that the licensee was an employee and a driver on the policy could be submitted.”

• Onil Auto Care

“This is another of the Rapo & Jepsen policies which were obtained by fraudulently representing that the insured was a viable corporation, when in fact, Mr. Onil Rivas Martinez works for a body shop that is not his own business. When this policy came up for renewal, Mr. Rivas Martinez had actually obtained a valid Massachusetts license and indicated to Lucas Lemes at the Everett Office of Point that he would like to “change everything over into his own name”, as he now had a valid license and didn’t feel it was necessary to misrepresent that he had an auto body shop. Lucas Lemes told him that to save money, he should renew the commercial policy and should purchase a Worker’s Compensation policy from Travelers to support his claim of owning a business.”

• Carlos DeSouza

“In the case of Carlos DeSouza, Point fraudulently represented several times to Arbella that Sindy Sabino was an employee of DeSouza’s business when Mr. DeSouza had made it clear that she is not–she is the insured’s sister and works for a bank. Point’s insistence on Arbella’s acceptance of this false representation is clear from the emails supplied. In fact, Mr. DeSouza does not have a valid operator’s license; nor does his wife who is his only employee.”

• Oseas Linez

“This insured informed Point that he was months away from being able to obtain a Massachusetts license. The prior policy, which misrepresented that he had his own business, was cancelled due to his having not returned the renewal application. Instead of assisting this insured in obtaining a legitimate policy, Point employees advised him to continue misrepresenting that he had a corporation and to use his brother’s Massachusetts license and misrepresent that his brother was the only driver and President of the Corporation by amending documents at the Secretary of State’s Office.”

• Yvette Soto

“Again, Ms. Soto informed Point that she no longer had a cleaning business, as was originally represented by the Rapo & Jepsen Agency. At the time her policy was up for renewal, she had a personal policy for another vehicle and told the agency personnel that she would like to obtain a personal policy for the vehicle on the commercial policy. Again, in spite of a direct request by the insured to correct the false policy representations, Point Employees chose to direct her to continue to misrepresent that she had a cleaning business, although she works for a dentist.”

• Manuel Lemus-Navarro

“When this policy came up for renewal, Leandro Rodrigues contacted the insured and filled in the renewal application for him falsely alleging that his sister drove the vehicle and that he had a cleaning business. This is another instance in which the insured was directed to buy a liability policy for the non-existent cleaning business in order to bolster the claim that he owned such a business.”

Point denies allegations and asserts it acted correctly

In response to Arbella’s 500‑page plus cancellation notice, Point has submitted a 600‑page response including a 14‑page memorandum from its attorney, Joseph Lewin, of Bowditch and Dewey. Attorney Lewin has represented Point in its various legal proceedings against Arbella before the Superior Court, the Division of Insurance and CAR. Before representing Point, Attorney Lewin represented Rapo & Jepsen before CAR in opposing the cancellation of that agency’s limited servicing agreement by Arbella.

The appeal of Point from the prior hearing befoer the Market Review Committee is pending before the Division of Insurance. This appeal related to the Arbella underwriting rules that became a bone of contention between the parties in a prior hearing.

Also, pending before the Division of Insurance is the license cancellation of the principal of Rapo & Jepsen, John Rapo. The Division is presently seeking a summary decision before the Division’s hearing officer revoking Mr. Rapo’s licenses. That matter is still pending. Agency Checklist will keep its readers posted when there is a decision by the Division.

Point claims it has tried to work with Arbella but there are disagreements that have to be resolved by the Division of Insurance

Point’s asserts that since purchasing the Rapo and Jepsen book of business, Point has tried to work with Arbella to ensure compliance with CAR Rules. However, Point and Arbella have disagreed about what procedures and eligibility standards are consistent with existing CAR Rules. Since the parties could not agree among themselves, there has been extensive litigation over the proper eligibility requirements for commercial policies and whether Arbella may impose certain conditions, procedures, and requirements for commercial customers of Point to renew their policies.

In Point’s view, Point is simply seeking, as is its right, a final ruling from the Division of Insurance as to what the correct policies and procedures should be for Point and for Arbella. Also, while Point disagrees with the positions taken by Arbella, until the Division of Insurance rules, Point has made a good faith effort to comply with those requirements.

Point renewal rate so far in 2017 is 25% following Arbella’s guidelines

In its submission, Point states that since January 2017, it has in good faith and diligently implemented Arbella’s eligibility criteria, imposed those requirements on prior Rapo & Jepsen customers and any new customers, and followed Arbella’s procedures to ensure that only eligible customers are insured through CAR.

As a result, Point has drastically reduced the number of commercial policies in its book of business by following Arbella’s policies and procedures and CAR Rules. Of the 3105 commercial policies in force from January 1, 2017 through July 31, 2017, Point only renewed or rewrote 784. The remaining 2095 of those policies are no longer with Point.

Point notes that the 75% decrease in commercial policies placed by Point is not consistent with Arbella’s allegation that Point has “showed no inclination to change the fraudulent business practices engaged in by Rapo & Jepsen Agency, except to improve concealment of its fraudulent practices.”

Point also notes that the vast majority of the policies that did not renew with Point went to other servicing carriers with little or no verification stating:

Indeed, many of the policies were re-written by Arbella and ceded to CAR, just through other agencies…Because the other servicing carriers do not impose the same requirements and eligibility standards as Arbella and because Arbella does not impose the same policies and procedures on other agencies, ineligible customers simply drive to a competitor of Point and renew their insurance through a different agency.

Point’s submission respond to each of the insureds listed by Arbella

Per Point, its employees explained to each customer (like the thousands of customers whose policies Point did not renew) the requirements to renew their commercial policies and that their policies could not be renewed unless those eligibility requirements could be met. The information supplied on each application came from the customer, not from Point, and Point did not have any basis to suspect fraud or otherwise incorrect information.

Point also argued that:

While it is possible that the customers provided false information to Point, Point was not aware of any such information and did not knowingly assist the customers in engaging in fraudulent activity or fail to notify Arbella of the same. Point has screened out more than 75% (2000+) of existing customers who do not meet Arbella’s eligibility criteria. The fact that only fifteen insureds in the span of 12 months (out of several thousand existing customers) have been identified by Arbella as not meeting the eligibility criteria is simply inconsistent with an agency which is engaged in knowingly assisting its customers obtain commercial policies when they are ineligible.

In its response, Point, while noting that Arbella in its submissions to CAR identifies fifteen customers of Point that Arbella contends fraudulently renewed their commercial policies with the assistance of Point, disputes that it knowingly assisted any customer in fraudulently renew a commercial policy. In support of its claim it submitted as part of its 600-page response documentation with respect to each of the fifteen customers identified by Arbella in its submission.

• written statements from the insureds concerning the allegations asserted by Arbella;
• written statements from Point stating the facts surrounding the particular transaction;
• a statement of facts concerning the transaction and illustrations of contradictions and flaws contained in the SIU interview transcripts submitted by Arbella;
• supporting/relevant documentation.

Abridged summaries of responses filed with Point’s submission

Beside the statements from insureds and Point employees and related documentation Point submitted, it also provided its own summary of the transactions and history for each of the insureds that Arbella Bell identified in its submission.

For purposes of completeness, Agency Checklist has included in abridged summary of the responses filed by Point through its counsel. Point’s summaries are considerably longer than the Arbella submissions and Agency Checklist’s has abridged the summaries for what it considers, and hopes, are the salient features of Point’s response. Because of the abridgment, any interested readers may wish to review the full submission that contains in some cases subsequent statements by insureds purportedly disclaiming the statements given to the Arbella SIU investigator. (See access information following listing).

1. Safe Stone Masonry

“Arbella’s summary of Safe Stone Masonry contains materially false statements of fact and what appear to be troubling redactions of information intended to mislead CAR. Contrary to Arbella’s representation, Mr. DeMateos did not initially obtain a commercial auto insurance with Point or its predecessor, Rapo and Jepsen…At that time, and through an agency other than Point or RJIS, the insured obtained a commercial auto policy with Safety Insurance as the Servicing Carrier….In November 2016, the customer came back to Point to re-write his policy which had been cancelled … Point did not know any of the information supplied was false and relied on the information provided by the insured.” (Insured is deceased).

2. VH Improvement/Mercelo Dos Santos

“Mr. Dos Santos operates a legitimate construction business and had incorporated in 2011 without the assistance of Point or Rapo & Jepsen. …Point representatives informed him of the requirements to obtain a commercial policy and he supplied all of the necessary information and documentation. … Point told Mr. Dos Santos that the other operator did not need to be an employee, as long as he was an operator of the vehicle…The evidence is clear that Mr. Santos represented to Point that Mr. Foley [listed operator] was an employee. He [Mr. Dos Santos] came back to Point in July 2016–after giving a statement to Arbella’s SIU department-and affirmed again in writing that Mr. Foley “is a driver and employee” of the company.”

3. Chun Restaurant Maintenance

“Mr. Escalante-Chun came to Point for help with his renewal application. Point representatives assisted him in completing the application. They went through the questions and Mr. Escalante-Chun provided the answers. Mr. Escalante-Chun later went to a different Point office and was told his commercial policy could not be renewed because he could not satisfy Arbella’s requirements. He was also told that he could obtain a personal policy. Mr. Escalante-Chun’s statements about the forming a corporation in order to get a federal Tax-ID are obviously confused, as Mr. Escalante-Chun already had a federal Tax-ID for his sole proprietorship which had been used previously to register and insure his vehicle. ”

4. Pilar Obergon/Pilar’s Catering

“Arbella bases its claim of misrepresentation on its SIU interview of Mr. Obergon …However, Mr. Obergon has submitted a statement herewith affirming that he in fact has two other business, including Pilar’s Catering. Confirmation of the same through public internet listings is also attached. Mr. Obergon represented to Point when the applications were completed that he has a catering business and he signed the pertinent documents confirming those facts.…Mr. Obergon has submitted a signed statement subsequent to his SIU interview that refutes Arbella’s assertions.”

5. Jean Claude Nadege /Nadege Jewelry

“Arbella refused to renew this policy and claims fraud in the application because the name of the d/b/a is “Nadege Jewelry”…Contrary to the assertions of Arbella, she states unequivocally that the car dealership from which she purchased the vehicle, not Point or Rapo & Jepsen, helped her create her sole proprietorship and obtain and Tax-ID number…When Point made efforts to correct the name/nature of the business…Arbella told Point that the name or nature of a sole proprietorship’s business is irrelevant. Yet, that is the very reason Arbella refused to renew the policy and claims Point to have furthered the insured’s alleged misrepresentations…Ms. Nadege has submitted a signed statement subsequent to her SIU interview that refutes Arbella’s assertions.”

6. Lopez Iron Works

“Arbella’s claim that Point knowingly submitted a fraudulent renewal application is without merit, …Mr. Lopez has since issued a signed statement admitting that he provided Point with answers to all questions on his insurance renewal application, which he signed under the pains and penalties of perjury. … Point had no reason to doubt the validity of Mr. Lopez’s registered business, particularly given that it had access to information indicating that two separate banking institutions had approved loans to Mr. Lopez’s business…”

7. JSantana Plastering LLC

“…Point did not fraudulently represent that Mr. Santana’s girlfriend, Mariam Beurekjian, was an employee and driver of the vehicle used by his plastering businesses. …Ms. Beurekjian ….met with Point to complete the paperwork for JSantana Plastering LLC’s policy … She further represented to Point that she was the principal driver of the Nissan Pathfinder, and thereafter presented a check for a $1,100.00 down payment on the policy… Mr. Santana has submitted a signed statement subsequent to his SIU interview that refutes Arbella’s assertions.”

8. Darwin Colindres/ Coll Handyman

“Point denies Mr. Colindres’ assertion during his SIU interview that he told Point he did not in fact have a business in connection with his application for commercial auto renewal. …Mr. Rozembarque notes that Mr. Colindres provided Point with a 147C letter from the IRS related to his business (a fact which is omitted from Mr. Colindres’ interview with Mr. Spellman), and further notes that Mr. Colindres’ vehicle was financed under his business name by Community Credit Union of Lynn…Mr. Colindres has since issued a signed statement indicating that he engages is business outside his employment with the company SKM, a fact that was not disclosed during his interview with Mr. Spellman…”

9. Joao Lima/W and J Painting Corporation

“Point denies that it represented to Joao Lima that it was permissible for him to find ‘anyone with a Massachusetts license’ in furtherance of submitting a fraudulent application. Mr. Lima has since issued a signed statement clarifying that Point informed him that any qualified driver “had to be either an employee or household member,” and Point agent Christina Galvin has submitted a lengthy, detailed statement to that same effect. Point notes additionally that it was Mr. Spellman, not Mr. Lima, who suggested during the interview (conducted without a translator) that Ms. Galvin told Mr. Lima “anyone” with a Massachusetts driver’s license would suffice for his policy.”

10. Onil Auto Care

“Arbella’s accusations with respect to the Onil Auto Care policy renewal are derived solely from Onil Rivas Martinez’s claim during his SIU interview that he did not operate his own business. Mr. Rivas Martinez, however, has since issued a signed statement in which he affirms that he does, in fact, own an auto body business. … Mr. Rivas chose to renew the commercial policy and purchase a workman’s compensation policy which was required by Arbella to complete the renewal process…Mr. Rivas has submitted a signed statement subsequent to his SIU interview that refutes Arbella’s assertions.”

11. Carlos DeSouza

“Arbella does not dispute that Mr. Desouza owns and operates a bona fide business or that he has an employee, but rather points to certain emails between Point and Arbella in which Point insurance characterizes Mr. DeSouza’s sister, Sindy Sabino, as his “employee” to erroneously suggest that this insurance application was fraudulently completed. Mr. Desouza had in fact previously affirmed in writing that she was his business partner and an operator of the vehicle. …Point denies that any fraud was committed in connection with this renewal application. Mr. DeSouza has submitted a signed statement subsequent to his SIU interview that refutes Arbella’s assertions.”

12. Oseas Lainez-Martinez

“Point denies that either of the Lainez-Martinez brothers indicated to Point that their painting business was a sham. The Lainez-Martinez brothers approached Leandro Rogrigues of Point and requested that Mr. Rodrigues assist them in transferring ownership of their business from Oseas Lainez-Martinez to his brother, Jose Lainez-Martinez. Mr. Rodrigues was not aware that the Lainez-Martinez brothers had any fraudulent intent in effecting the change of ownership…He subsequently assisted them several months later in transferring ownership of the vehicle and insuring it under a personal policy.”

13. Yvette Services

“Ms. Desoto came to Point to reinstate her commercial policy because she had missed Arbella’s deadline for submitting the renewal application…When she came to renew/reinstate the policy, she requested that Point transfer it to a personal policy. Point quoted a personal policy but could not transfer the vehicle to a personal policy because the vehicle was owned and registered in the name of her business and the finance company would not release her title. …She confirmed to the SIU investigator …that she still occasionally took cleaning jobs, although she was employed primarily at a dental office. After explained the situation, Ms. Soto moved forward with the application for a commercial policy which Arbella approved.”

14. Lemus Services Inc.

“Point completed the renewal application utilizing information which had been supplied by the insured and confirmed in writing. When Mr. Lemus first tried to renew his policy, he was instructed (correctly) by Point that the policy would not be renewed by Arbella unless there was a Massachusetts driver listed on the policy…As he told the SIU Investigator, he did not disclose to the agent that he did not have a cleaning business or that his sister was not a regular operator of the vehicle. The Point representative had no indication that any of the information on the renewal application was inaccurate. As they went through the application, the Point representative reviewed Arbella’s requirement that the insured provide a tax return, general liability or workman’s compensation policy with the application….Mr. Lemus decided to purchase such a policy upon review of the requirements contained in Arbella’s renewal application.”

15. Kry Services

“Arbella’s portrayal of Mr. Kry’s statement is misleading…When asked by Arbella’s SIU investigator about completing the form [renewal application] , Mr. Kry stated: “Yes. I filled it out. They filled it out–I filled it out with them at Point.” In fact, Mr. Kry went to Point and a customer service representative went question by question through the form with Mr. Kry. Mr. Kry supplied the information on the form and signed the form…Point had no reason to inquire as to this gentlemen’s other employment.”

Copy of Arbella’s or Point’s submissions to CAR

For a copy of any submission mentioned in this article, send your request to: Scotter@agencychecklists.com.

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