Insurance Fraud Investigation Flashcards

A public adjuster submits a hurricane claim on behalf of a homeowner that is 300% higher than the insurer's independent estimate. No documentation supports the difference. Which fraudulent role is the public adjuster MOST likely playing?

Answer: Corrupt facilitator

A public adjuster who inflates claims without supporting documentation acts as a corrupt facilitator enabling insurance fraud.

Under the Health Insurance Portability and Accountability Act (HIPAA), an insurer investigating a fraud claim may access a claimant's protected health information (PHI) under which exception?

Answer: Fraud and abuse exception for health oversight activities

HIPAA's health oversight exception permits PHI disclosure for fraud investigations conducted by entities with lawful authority over the health system.

A claimant's attorney sends a demand letter threatening bad faith litigation unless the insurer settles a suspicious bodily injury claim above policy limits. How should the SIU investigator BEST advise claims handling?

Answer: Continue the fraud investigation while legal counsel monitors bad faith risk

SIU investigations should continue in coordination with legal counsel, who can evaluate bad faith exposure while the fraud investigation proceeds.

In the context of premium fraud, 'fronting' refers to:

Answer: Using a low-risk driver as the listed primary driver to reduce auto premiums for a high-risk actual driver

Fronting places a lower-risk driver as the named insured on an auto policy to obtain cheaper premiums for a higher-risk primary driver.

Which financial red flag is MOST indicative of an arson-for-profit motive in a commercial property fire investigation?

Answer: The business had declining revenues, delinquent loans, and excess inventory prior to the fire

Financial distress indicators such as declining revenues, unpaid debts, and excess inventory are classic arson-for-profit motivators.

A fraud examiner conducting link analysis maps connections between claimants, vendors, and attorneys. The PRIMARY purpose of this technique in insurance fraud investigations is to:

Answer: Identify organized fraud networks and common participants

Link analysis visually maps relationships to uncover organized fraud rings by identifying shared participants across multiple claims.

Which statement BEST describes the difference between a reservation of rights letter and a coverage denial in insurance fraud investigations?

Answer: A reservation of rights letter allows investigation to continue while preserving defenses; a denial closes the claim

A reservation of rights letter notifies the insured that the insurer is investigating potential coverage defenses without waiving them, while a denial concludes the coverage decision.