ACE Fraud Detection & Prevention 3

Question 1

Which technique is used by fraud rings to exploit the ACORD 80 (Homeowners Application) when committing property insurance fraud?

Accepted Answer

Falsifying prior loss history on Section IV

Answer

Overstating the number of occupants

Answer

Changing the policy effective date retroactively

Answer

Omitting the mortgage company name

Question 2

In premium fraud, what does 'fronting' refer to?

Accepted Answer

Naming a low-risk driver as the primary insured when a high-risk driver is the actual primary user

Answer

Using a broker to submit falsified applications on behalf of a client

Answer

Collecting premiums without remitting them to the insurer

Answer

Inflating payroll figures to increase business income coverage

Question 3

Which ACORD standard is most relevant to electronic data interchange (EDI) in workers' compensation fraud reporting?

Accepted Answer

ACORD WCIO EDI

Answer

ACORD 25

Answer

ACORD AL3

Answer

ACORD 140

Question 4

A claimant submits three water damage claims to different insurers within 18 months. What best describes this fraud pattern?

Accepted Answer

Hard fraud — fabricating losses to collect multiple payments

Answer

Soft fraud — exaggerating a single legitimate loss

Answer

Premium fraud — misrepresenting risk factors at application

Answer

Agent fraud — broker manipulating policy documents

Question 5

What is the significance of the 'date reported' vs. 'date of loss' gap in claim fraud analysis?

Accepted Answer

Unusual reporting delays, especially near policy cancellation, can signal backdating fraud

Answer

A longer gap always indicates the claim is fraudulent

Answer

ACORD standards require all claims to be reported within 24 hours

Answer

A short gap indicates the claimant fabricated the loss

Question 6

Which entity maintains the National Insurance Crime Bureau (NICB) database used for vehicle theft fraud detection?

Accepted Answer

A nonprofit supported by property-casualty insurers

Answer

The federal Department of Transportation

Answer

The NAIC as a regulatory body

Answer

ACORD as part of its data standards initiative

Question 7

In life insurance fraud, what is 'STOLI' and why is it a fraud concern?

Accepted Answer

Stranger-Originated Life Insurance — investors fund policies on strangers' lives, subverting the insurable interest requirement

Answer

State-Operated Life Insurance — a government scheme that competes with private carriers

Answer

Structured Transfer of Life Interest — a legal tax avoidance strategy

Answer

Systematic Term and Optional Life Indemnification — a reinsurance arrangement