Fraud Identification and Mitigation Flashcards
7 cards from real CU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fraud Identification and Mitigation flashcards as text
Which red flag is most commonly associated with premium diversion fraud in insurance?
Answer: Agent remitting partial premiums while retaining the difference
Premium diversion occurs when an agent collects premiums from policyholders but keeps some or all of the funds rather than forwarding them to the insurer.
A property underwriter notices that a commercial applicant's loss history shows three total-loss fires in five years at different locations. This pattern is most indicative of:
Answer: Arson-for-profit fraud
Multiple total-loss fires at different locations within a short period is a classic indicator of arson-for-profit, where the insured intentionally destroys property to collect insurance proceeds.
The SIU (Special Investigations Unit) is primarily responsible for:
Answer: Investigating claims with indicators of potential fraud
SIUs investigate claims that exhibit fraud indicators, gathering evidence and coordinating with law enforcement when necessary.
An applicant for disability income insurance who overstates their income to obtain a higher benefit limit is committing which type of fraud?
Answer: Application fraud
Misrepresenting income on an insurance application to obtain a higher benefit limit constitutes application fraud, which occurs at the policy inception stage.
Which analytical technique involves comparing a claimant's current loss patterns against a statistical model of expected losses to detect anomalies?
Answer: Predictive modeling
Predictive modeling uses statistical algorithms to identify claims that deviate significantly from expected patterns, flagging them for further fraud investigation.
A contractor submits inflated repair estimates after a hailstorm, and the insured knowingly signs off on the exaggerated amounts. This scenario best describes:
Answer: Organized fraud ring involving both parties
When both the contractor and insured knowingly participate in inflating repair estimates to extract higher claim payments, this constitutes organized fraud involving multiple parties.
Under the Insurance Fraud Prevention Model Act, insurers are generally required to:
Answer: Maintain an anti-fraud plan and report fraud to authorities
The IFPMA requires insurers to establish anti-fraud plans, train employees, and report suspected fraud to state insurance fraud bureaus.