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
Which technique is used by fraud rings to exploit the ACORD 80 (Homeowners Application) when committing property insurance fraud?
Answer: Falsifying prior loss history on Section IV
Falsifying prior loss history on the ACORD 80 conceals prior claims, allowing fraudsters to obtain coverage they would otherwise be denied or pay higher premiums for.
In premium fraud, what does 'fronting' refer to?
Answer: Naming a low-risk driver as the primary insured when a high-risk driver is the actual primary user
Fronting involves listing a low-risk driver as primary to reduce premiums while the actual high-risk driver primarily uses the vehicle.
Which ACORD standard is most relevant to electronic data interchange (EDI) in workers' compensation fraud reporting?
Answer: ACORD WCIO EDI
ACORD WCIO EDI standards govern electronic reporting of workers' compensation data, including first reports of injury that feed into fraud detection workflows.
A claimant submits three water damage claims to different insurers within 18 months. What best describes this fraud pattern?
Answer: Hard fraud — fabricating losses to collect multiple payments
Submitting fabricated or repeated claims to multiple insurers to collect overlapping payments is a classic hard fraud pattern.
What is the significance of the 'date reported' vs. 'date of loss' gap in claim fraud analysis?
Answer: Unusual reporting delays, especially near policy cancellation, can signal backdating fraud
Reporting delays, particularly when a claim is filed just before policy cancellation or after a coverage lapse, are a recognized red flag for backdating fraud.
Which entity maintains the National Insurance Crime Bureau (NICB) database used for vehicle theft fraud detection?
Answer: A nonprofit supported by property-casualty insurers
The NICB is a nonprofit organization funded by property-casualty insurers to help detect and prevent insurance crime including vehicle theft fraud.
In life insurance fraud, what is 'STOLI' and why is it a fraud concern?
Answer: Stranger-Originated Life Insurance — investors fund policies on strangers' lives, subverting the insurable interest requirement
STOLI schemes involve third-party investors funding life insurance policies on strangers specifically to collect death benefits, violating insurable interest laws.