Insider Insurance Fraud: Former Agents Fueling a New Wave of Deception

Trust is a cornerstone of the insurance industry. Whether it’s a policyholder trusting their carrier, or an employer trusting their claims administrator, the whole system relies on transparency and ethical behavior. But what happens when the very people who once upheld that trust turn against it?

In a recent case out of California, a former insurance agent was charged with multiple felony counts after allegedly orchestrating a $1.8 million investment scam under the guise of a cannabis business. The case is more than just a headline. It’s a warning: former insiders who know how the system works can be some of its most dangerous threats.

The Case: A Career Built on Fraud

According to the California Department of Insurance, former insurance agent Matthew Evans, 36, of Palmdale, allegedly deceived several clients and acquaintances into investing more than $1.8 million in a non-existent marijuana business named “House of Green.” Evans is accused of leveraging his professional credibility to build trust and secure significant investments—all under false pretenses.

The Department’s investigation revealed that Evans used funds for personal expenses and failed to return any profits, as the business itself never existed. While the case remains active in court, the implications for the insurance community are clear: when licensed professionals exploit their status for personal gain, the damage reverberates well beyond individual victims.

This wasn’t a one-off act of desperation. It was a calculated fraud operation carried out by someone who understood how to weaponize people’s perception of trust.

What makes this case so alarming isn’t just the dollar figure. It’s the insider insurance fraud angle. Evans wasn’t just someone outside the system trying to exploit it; he was someone trusted by clients and colleagues alike. That betrayal carries ripple effects across:

• Claims Management: When policyholders or investors are misled by professionals they rely on, it erodes trust in the broader claims system. Adjusters are increasingly tasked with validating not just the claims, but the legitimacy of the coverage or relationships that underpin them.
• Medical Management: In more elaborate fraud schemes, fraudulent investments or business fronts can serve as covers for exaggerated or staged medical claims. Medical case reviewers must be alert to patterns that don’t align with legitimate injury histories.
• Fraud Investigations: Insider-led scams require a different level of scrutiny. Evans’ case shows how former professionals can manipulate perceptions, documentation, and networks. Investigation teams must be ready to look beyond standard checklists and explore deeper patterns of misconduct.

A Larger Pattern: Insider Insurance Fraud

This isn’t the only instance of former agents or adjusters crossing into fraud territory. A 2024 NICB report highlighted a 17% increase in cases involving licensed industry professionals who exploited their access to commit fraud. Whether it’s agents creating ghost policies, convincing clients to buy fake coverage, or misappropriating funds meant for premium payments, these professionals know how to stay one step ahead of detection.

Another case that underscores this trend is that of Glenda Taylor-Sanders, a former licensed insurance producer in North Carolina. From 2017 to 2019, she submitted forged loan applications on behalf of her trucking industry clients and funneled more than $400,000 in fraudulently obtained premium financing into her personal accounts. Instead of securing coverage, she used the funds to purchase luxury items, including a Maserati, a Mercedes-Benz, and football tickets.

Taylor-Sanders pled guilty to wire fraud and was sentenced to 66 months in federal prison. Her attempt to reverse the plea was denied in 2023. Like Evans, Taylor-Sanders exploited insider knowledge and client trust, but through financial institutions rather than false investments. Both cases show how former agents are evolving their fraud tactics while still leaning on the same foundation: access and authority.

Even when fraud occurs outside the usual claims process, its effects have a way of circling back. Patterns of misrepresented coverage, falsified documentation, or deceptive client histories can quietly shape decisions long before a red flag is raised. These cases, while seemingly unrelated, offer subtle but important cues about where fraud might take root and how critical it is to stay alert to inconsistencies, even in places that seem routine.

Prevention Starts with Collaboration

While the headline might focus on a single fraudster, the solution lies in a multi-pronged approach. This is where the interplay of fraud investigations, claims management, and medical oversight becomes essential.

•  Unusual patterns: Claims managers should flag unusual patterns like rapid policy growth, duplicate policies, or high claim-to-premium ratios, especially when linked to unfamiliar or small-scale agencies.
• Fraud Detection Tools: AI-powered anomaly detection tools can help surface discrepancies in investment patterns, policy originations, or medical billings that may hint at deeper misconduct.
• Medical Case Reviews: Medical management teams should continue to assess treatment plans for medical necessity and consistency with the claim narrative. Ghost injuries, excessive treatments, or billing across multiple providers for similar claims are common red flags.
• Cross Communication: Fraud doesn’t live in a silo. Adjusters, medical case managers, SIU teams, and legal should have aligned protocols and easy lines of communication. In complex fraud cases, the connecting thread often weaves through multiple touchpoints.

Insider Insurance Fraud: What to Watch For

Self-insured employers and risk managers aren’t immune. In fact, they’re often prime targets when former professionals re-enter the industry in roles such as third-party administrators, consultants, or business development partners.

Be cautious of individuals promoting investment ventures or value-added services that promise quick returns or unconventional business models.

Thorough vetting processes, background checks, and due diligence on business affiliations are essential. If a former agent or adjuster suddenly pivots to offering financial services, cannabis investments, or consulting contracts, it’s worth a second look.

In one instance, a claims team flagged a suspiciously large policy premium that had been paid upfront by a newly licensed agency. Medical reviewers noticed a surge in soft tissue injury claims tied to that same book of business. A fraud investigation team was looped in and discovered the agency was creating fake claims to drive commissions and kickbacks. The fraud was stopped before it reached litigation, and the collaboration saved the carrier hundreds of thousands of dollars.

Can You Rebuild Trust?

The Evans case is a stark reminder of how much damage can be done by a single person who understands the system from the inside out.

When fraud is discovered early, legitimate policyholders are protected, costs are controlled, and confidence in the claims process is preserved. The work may happen behind the scenes, but its impact touches every corner of the industry.

As we look ahead, one thing is clear: staying ahead of emerging fraud trends means watching not just the outside threats, but the ones who once had a key to the inside.

For more on fraud schemes involving licensed professionals, check out our related blogs here.

Check out our sources from our friends at the Insurance Journal and NICB!

1. “Former Insurance Agent Arraigned for Allegedly Stealing $1.8M in Cannabis Scam.” Insurance Journal, 1 Aug. 2025, www.insurancejournal.com/news/west/2025/08/01/833858.htm. Accessed 5 Aug. 2025.

2. United States v. Glenda Taylor-Sanders, No. 21-4862, United States Court of Appeals for the Fourth Circuit, 2023. FindLaw, caselaw.findlaw.com/court/us-4th-circuit/115604872.html. Accessed 5 Aug. 2025.

3. “NICB: Insurance Fraud by Industry Insiders Up 17% in 2024.” National Insurance Crime Bureau, www.nicb.org/news/news-releases. Accessed 5 Aug. 2025.