Risk Management & Fraud Prevention in Claims Handling Flashcards
7 cards from real CALA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Management & Fraud Prevention in Claims Handling flashcards as text
A claimant involved in a minor fender-bender claims total disability for six months. Which investigative tool BEST challenges the duration of disability?
Answer: Independent Medical Examination (IME)
An Independent Medical Examination by an insurer-selected physician can objectively assess whether the claimed disability duration is medically justified.
Under most state insurance fraud statutes, what is required for an insurer to report suspected fraud without civil liability to the claimant?
Answer: A good-faith belief that fraud may have occurred
Most state fraud immunity statutes protect insurers from civil liability when fraud is reported in good faith, even if the allegation is ultimately unproven.
What does a 'coverage defense' mean in the context of a fraudulent auto claim?
Answer: Denying indemnity based on a policy exclusion or misrepresentation voiding coverage
A coverage defense denies the claim based on policy provisions — such as fraud exclusions, material misrepresentation, or concealment — that void or limit coverage.
An SIU investigator identifies that five separate claimants in recent accidents all share the same attorney, same chiropractor, and same repair shop. This pattern is MOST consistent with:
Answer: An organized fraud ring with coordinated referral relationships
Shared attorney, medical provider, and repair shop across multiple claimants is a hallmark indicator of an organized insurance fraud ring.
Which element of risk management involves setting adequate case reserves on claims with fraud indicators?
Answer: Financial risk mitigation through accurate reserving
Accurate case reserves on potentially fraudulent claims protect the insurer's financial position and ensure regulatory reserve adequacy requirements are met.
A claimant refuses to submit to an Examination Under Oath (EUO) after the insurer makes a proper demand. What is the typical result?
Answer: The refusal constitutes a breach of the cooperation clause, which may void coverage
Refusing a properly demanded EUO breaches the cooperation clause found in most auto policies, which can void coverage and justify denial.
What is the significance of 'earned premium' when calculating an insurer's fraud loss ratio?
Answer: Fraud losses are expressed as a percentage of earned premium to measure exposure
The fraud loss ratio divides total fraud-related losses by earned premium, providing a standard metric for measuring the financial impact of fraud on the insurer's book of business.