Fronting is a term used in several contexts to describe illegal or deceptive practices in insurance and finance. Below are different scenarios where fronting is involved:
Insurance Fronting
Fronting is the illegal act of lying to an insurer about the main driver of a car to secure cheaper premiums. It is considered a type of insurance fraud and carries serious consequences, including the possibility of acquiring a criminal record. When a claim is made, insurers may investigate and, if they conclude fronting has occurred, may refuse to cover any damages.
Reinsurance Fronting
Reinsurance fronting occurs when an insurer underwrites a policy to cover a risk, then transfers that risk to a reinsurer. Captives, which are licensed insurance companies fully owned and controlled by the insured, fall under this type of self-insurance.
Front Running in Stock Markets
Front running is illegal in the stock market and refers to investors trading based on non-public information.
FAQs
What is a fronting fee?
to be answered as it appears to be a separate question not addressed in the provided text
Can you put someone else as the main driver?
Doing so is known as fronting and is considered insurance fraud. It should be avoided due to potential legal repercussions including criminal charges.