CALA Fraud Detection & Prevention 2 — Questions and Answers
Question 1: A claimant reports a burglary but cannot provide receipts or photos of the stolen items. Which investigative step is most appropriate?
- Deny the claim immediately
- Request a recorded statement and supporting documentation (Correct answer)
- Pay the claim at face value to avoid litigation
- File a police report on behalf of the claimant
Correct answer: Request a recorded statement and supporting documentation
Requesting a recorded statement and supporting documentation is standard practice to verify ownership and the legitimacy of a burglary claim.
Question 2: Which pattern most strongly suggests organized auto insurance fraud in a staged accident ring?
- A single-vehicle accident with one claimant
- Multiple claimants from the same household involved in separate minor accidents (Correct answer)
- A rear-end collision reported to police at the scene
- An accident on a highway during rush hour
Correct answer: Multiple claimants from the same household involved in separate minor accidents
Multiple claimants from the same household appearing in separate minor accidents is a hallmark indicator of organized staged accident fraud rings.
Question 3: Under the Insurance Fraud Prevention Act framework, insurers are generally required to report suspected fraud to which entity?
- The Federal Bureau of Investigation
- The state Department of Insurance fraud division (Correct answer)
- The National Insurance Crime Bureau only
- The local police department exclusively
Correct answer: The state Department of Insurance fraud division
Most states require insurers to report suspected fraud to the state Department of Insurance fraud division, though NICB reporting may also be required.
Question 4: A contractor submits invoices for roof repairs that appear inconsistent with a property's pre-loss condition. What is this an example of?
- Hard fraud involving an inflated claim (Correct answer)
- Soft fraud involving a legitimate partial loss
- Subrogation opportunity
- Coverage dispute
Correct answer: Hard fraud involving an inflated claim
Submitting inflated invoices for repairs exceeding actual damage is a form of hard fraud, typically involving deliberate material misrepresentation.
Question 5: Which of the following best defines 'premium fraud' in the insurance context?
- Filing a claim for a loss that never occurred
- Misrepresenting risk characteristics to obtain lower premiums (Correct answer)
- Failing to pay a deductible after a loss
- Submitting duplicate claims to two different insurers
Correct answer: Misrepresenting risk characteristics to obtain lower premiums
Premium fraud involves misrepresenting material facts about the insured risk—such as garaging location or driver history—to secure a lower premium.
Question 6: An adjuster notices that a workers' compensation claimant's medical bills include treatment dates that postdate the alleged injury by three months with no prior appointments. What should the adjuster do?
- Approve all bills since the claimant is still injured
- Flag the claim for SIU referral and request a chronological medical review (Correct answer)
- Close the claim as exaggerated without further review
- Contact the treating physician and demand records be corrected
Correct answer: Flag the claim for SIU referral and request a chronological medical review
Unexplained gaps and billing anomalies are red flags warranting an SIU referral and thorough medical record review before any payment decision.
Question 7: Which technology tool is most commonly used by insurance companies to detect claim fraud through pattern recognition across large datasets?
- Standard spreadsheet software
- Predictive analytics and machine learning models (Correct answer)
- Manual file audits by claims supervisors
- Phone interviews with all claimants
Correct answer: Predictive analytics and machine learning models
Predictive analytics and machine learning models analyze large claim datasets to identify anomalous patterns that may indicate fraud.
CALA Fraud Detection & Prevention 2
A claimant reports a burglary but cannot provide receipts or photos of the stolen items.
Which investigative step is most appropriate?