CCA CCA Fraud Detection and Prevention 2 — Questions and Answers
Question 1: What is 'arson for profit' in the context of insurance fraud?
- Accidentally starting a fire and over-claiming the loss
- Deliberately setting fire to property to collect insurance proceeds (Correct answer)
- Claiming fire damage that was caused by an excluded peril
- Filing a fire claim for a property located in a different state
Correct answer: Deliberately setting fire to property to collect insurance proceeds
Arson for profit is hard fraud where the policyholder intentionally sets fire to their property — often when facing financial difficulty — to collect insurance money.
Question 2: Which of the following best describes 'premium fraud'?
- Filing multiple claims on the same loss
- Misrepresenting information at application to obtain lower premiums (Correct answer)
- Inflating a claim payment after the loss occurs
- Using another person's insurance card without permission
Correct answer: Misrepresenting information at application to obtain lower premiums
Premium fraud occurs when an applicant misrepresents facts (such as the primary driver, garaging location, or vehicle use) to pay lower premiums than they should.
Question 3: A doctor submits identical billing codes for every patient regardless of services provided. This is an example of:
- Upcoding
- Unbundling
- Cookie-cutter billing fraud (Correct answer)
- Phantom billing
Correct answer: Cookie-cutter billing fraud
Cookie-cutter (or template) billing fraud occurs when a provider uses identical billing codes for all patients without performing individualized services, inflating reimbursements.
Question 4: Social media posts showing a claimant performing physical activities they claim they cannot do are best used by adjusters to:
- Automatically deny the claim without further investigation
- Support an SIU referral and potential fraud investigation (Correct answer)
- Establish the insured's premium for the renewal period
- Prove the policy should have been canceled
Correct answer: Support an SIU referral and potential fraud investigation
Social media evidence showing activities inconsistent with claimed disability can support an SIU fraud referral and, if confirmed, may result in claim denial or prosecution.
Question 5: What is 'index system' used for in insurance fraud detection?
- To calculate premium rates based on actuarial tables
- To cross-reference claim data across multiple insurers to identify claimants involved in suspicious patterns (Correct answer)
- To track adjuster performance metrics
- To index inflation adjustments in claim settlements
Correct answer: To cross-reference claim data across multiple insurers to identify claimants involved in suspicious patterns
Index systems (like ISO ClaimSearch) allow insurers to share and compare claim data to identify individuals who have filed similar or suspicious claims with multiple companies.
Question 6: Under most state laws, adjusters and insurers are required to report suspected fraud to:
- The claimant's attorney
- The state department of insurance and/or law enforcement (Correct answer)
- The reinsurer only
- The insured's employer
Correct answer: The state department of insurance and/or law enforcement
Most states mandate that insurers report suspected fraud to the state insurance department and/or law enforcement, and many provide immunity from civil liability for good-faith fraud reports.
CCA CCA Fraud Detection and Prevention 2
What is 'arson for profit' in the context of insurance fraud?