"Over the last three years, growing numbers of property-casualty agents are using swindles to bolster shrinking profits in a troubled economy, magnified by the continued squeeze of tight commissions and relentless competition," he said.

Mr. Jay--who was vice president of communications for the National Association of Professional Insurance Agents back in the 1980s--said most rogue agents tend to be independents rather than captives, as carriers exert less control over independent producers.

"Independent agents also tend to write more complex commercial business that gives them added opportunities to defraud," he explained.

Mr. Jay cited the example of one Baltimore agent who took in more than $1.5 million by selling fake coverage and banking the premiums for his own use. "He also scammed premium firms by forging client signatures to premium finance contracts and keeping the money for himself," he said of the now convicted felon.

Over the past couple of years, the National Association of Insurance Commissioners has attempted to craft a model law requiring agents to forward premiums to the insurer within 24 hours.

In addition, it would require producers to set up trust accounts to segregate client payments from agency funds.

The law has languished in committee for two years with little interest in reviving it, according to Wes Bissett, senior vice president of the Independent Insurance Agents and Brokers of America.

"Obviously, we would be concerned about any fraud out there, but regulators and law enforcement officials have broad tools to deal with fraud today," he said.

Meanwhile, producers have found any number of ways to lighten your wallet without providing the protection expected.

Agents are authorized to issue binders--documents that list your policy number. The actual policy is mailed to the insurance agent. Agents can also issue certificates of insurance that small firms often need for business purposes, then collect the premium money, which is supposed to go into a trust account that is separate from the agent's regular business account.

Michael Godard, chief of the California Department of Insurance Investigations Division, said that technology has made it easier than ever to create phony forms and documents that look legitimate.

In 2004--the latest year for which statistics are available--the division opened 899 cases of agent fraud and closed 971 cases.

Mr. Godard said that this year the division will expand the number of staff members with peace officer status. "This means quicker, more aggressive and more independent investigations," he said.

Mr. Jay said agent fraud is often hard to spot because what happens is the customer will just get their money from the agent if they file a claim. In this way, agents can in a sense create their own insurance companies.

"Sometimes these agents are licensed, and some are just out and out fakes," according to Mr. Jay.

Agent crime "can really hurt individuals and can bankrupt a business," he said. "We have stories about businesses going under because they bought fake insurance and they have a claim and there is nothing [to cover it]."

Mr. Jay also noted that the potential for big-dollar premium fraud also exists, with large commercial brokers having been charged with stealing tens of millions of dollars in client premiums.

However, figuring the scope of agent fraud remains a challenge due to the lack of statistics.

"We are actually building a database where we are tracking arrests and convictions of agents," noted Mr. Jay. "Such data will be available by the end of the year."

The Jersey City, N.J.-based Insurance Services Office Inc. keeps track of fraudulent claims data, but not agent fraud, according to an ISO representative.

Cory Cox, who heads up the fraud unit in the Arkansas Insurance Department, said that while the number of agent fraud cases has remained steady, "what we seem to be seeing is an increase in the way that agents steal money."

The traditional scam has been merely pocketing premiums without forwarding them to insurance companies.

However, "recently, it seems that agents are creating false applications for persons who have not agreed to enter into a contractual relationship with the company," he said, adding this is probably driven by an increased use of technology.

A bad agent can get personal information rather easily, submit an application and then collect a year's worth of commission. "They think they can pay back the commission, but inevitably they cannot and the scheme collapses," he said.

Terry Raycraft, who heads up the Alabama Insurance Department, said some agents are dealing with fake entities--sometimes purportedly based offshore--that have no claims-paying ability.

"Sometimes even legitimate agents can be duped by these scams," he added.

Oftentimes, good agents can find themselves in difficult personal straits, prompting them to merely pocket the premium, particularly on the property-casualty side.

"They get in a gambling problem or a drug problem," he said. "But some, especially the younger ones, just see an opportunity to start raking in a lot of money."

As for the good-agent-gone-bad scenario, Mr. Raycraft said, "it has been my experience in my 21 years that it is a fairly consistent problem."

"Where it goes up and down is when Congress creates an Employee Retirement Insurance Security Act, and there is some sort of exemption from state regulation. The fraudsters will see that and jump in there because they are exempt from state regulation," he said.

Finally, there are instances of out-and-out scam artists posing as insurance agents.

Loretta Worters, vice president of the New York-based Insurance Information Institute, said that while working in Louisiana in the aftermath of Hurricane Katrina, she heard of many instances of "thieves posing as insurance agents and taking off with innocent people's money."

Ms. Worters advised that among the signs to look for are policies that cost far less than what other companies are charging, and companies that purportedly accept everyone--no matter how risky.

"If for any reason you doubt the reputation or honesty of the agent, contact the insurance company immediately," she said.