Fraud Detection & Prevention Flashcards
7 cards from real ACE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fraud Detection & Prevention flashcards as text
Under the federal 18 U.S.C. § 1033, which activity is specifically prohibited for individuals convicted of a dishonest act?
Answer: Engaging in the business of insurance without written consent of a state insurance regulator
18 U.S.C. § 1033 prohibits persons convicted of felonies involving dishonesty or breach of trust from engaging in the insurance business without regulatory consent.
What distinguishes 'hard fraud' from 'soft fraud' in terms of criminal prosecution risk?
Answer: Hard fraud involves deliberate fabrication of a loss and carries felony charges; soft fraud is often treated as a civil matter
Hard fraud (fabricating a loss entirely) is treated as a serious felony, while soft fraud (exaggerating a real loss) may be treated as a misdemeanor or civil matter depending on the jurisdiction.
Which technology is increasingly used by insurers to detect fraudulent property damage claims by comparing pre- and post-loss aerial imagery?
Answer: Geospatial satellite and drone imagery analysis
Satellite and drone imagery allows insurers to compare pre-loss property conditions against reported damage, exposing claims for losses that predate the reported event.
In workers' compensation fraud, what does 'claim padding' refer to?
Answer: Extending the duration of a legitimate claim beyond actual disability
Claim padding involves exaggerating the length or severity of a real injury to collect indemnity benefits longer than medically warranted.
Which ACORD standard facilitates the electronic reporting of suspicious activity from insurers to state fraud bureaus?
Answer: ACORD Fraud Reporting Standards aligned with state DOI EDI mandates
ACORD fraud reporting standards provide structured data formats that align with state Department of Insurance EDI mandates for suspicious activity reporting.
A physician bills for 30-minute office visits for workers' comp claimants, but surveillance shows visits lasting under 5 minutes. This best illustrates which fraud type?
Answer: Upcoding — billing for a higher level of service than provided
Upcoding occurs when a provider bills for a more extensive or expensive service level than was actually delivered, such as billing extended visits for brief encounters.
What is the primary benefit of insurers participating in the Coalition Against Insurance Fraud (CAIF)?
Answer: Collaborative advocacy, research, and public awareness initiatives to reduce insurance fraud
CAIF provides insurers, regulators, and law enforcement with collaborative research, training, and public education resources to combat insurance fraud industry-wide.