An uncle and nephew have been indicted in New York for allegedly selling over 40 unauthorized insurance policies that claimed to provide more than $250 million in coverage for homeowners, construction companies, and businesses at airports overseen by the Port Authority of New York and New Jersey, according to a report from AM Best.
The Manhattan District Attorney’s Office announced that Timothy “Tim” Barry Derham and Donald “Trip” Derham are accused of issuing fraudulent policies through Barbados-based captive International Underwriting Insurance Co.
According to AM Best, Tim Derham reportedly owns the offshore company, although a spokesperson clarified that it was sold on May 5, 2024.
The Derhams face charges of grand larceny in the second and fourth degrees, scheming to defraud, and offering a false instrument for filing.
Between March 2014 and April 2022, the company lacked authorization to conduct business in New York, according to the DA's office. During this period, International Underwriting had a net worth under $600,000, falling short of the $45 million equity requirement for offshore insurance companies.
Despite these financial limitations, many of the company's policies ranged from $1 million to $25 million in coverage.
Manhattan district attorney Alvin Bragg Jr. said, “New Yorkers trust that when they purchase insurance, whether to safeguard their home or operate on an airport tarmac, they are paying for protection in times of crisis. As alleged, these defendants flagrantly lied and issued worthless insurance policies from their offshore company while pocketing thousands in premiums and fees.”
Tim Derham is accused of making decisions about which policies to issue and their pricing, while Trip Derham handled operational and management duties, including creating false business records. Neither defendant informed clients that International Underwriting was not an authorized insurer in New York.
At one point, an employee of Inter-Insurance allegedly requested confirmation from Trip Derham about International Underwriting’s authorization status in New York.
In a follow-up email to AM Best, Trip acknowledged the company lacked such documentation. The DA’s office also said International Underwriting did not report its policies to the Excess Life Association of New York.
Additionally, the company is accused of creating fake Certificates of Liability Insurance, which were filed with the Port Authority on at least four occasions. These certificates falsely claimed that International Underwriting was authorized to write business in the U.S.
The case dates back over five years when a janitorial company owner used a policy issued by International Underwriting as coverage for a construction company.
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A company spokesperson denied responsibility to AM Best, claiming that the $250 million in coverage cited by the DA represents the total amount the captive has written since its inception in 2001. The company is cooperating with authorities and seeking a resolution.
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