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 of the following is an example of 'soft fraud' in auto insurance?
Answer: Adding pre-existing damage to a legitimate accident claim
Soft fraud (also called opportunistic fraud) involves exaggerating an otherwise legitimate claim, such as adding pre-existing damage to a real accident claim.
A key characteristic that distinguishes 'hard fraud' from 'soft fraud' is:
Answer: Hard fraud requires deliberate planning to create a false loss event
Hard fraud involves intentionally creating or staging a loss event (e.g., arson, staged accidents), whereas soft fraud involves exaggerating real losses.
An underwriter reviewing a workers' compensation application notices the employer has reclassified high-hazard employees into low-hazard job codes to reduce premiums. This is known as:
Answer: Employee misclassification fraud
Misclassifying employees into lower-risk job codes to reduce workers' compensation premiums is a common form of premium fraud that distorts the risk profile.
Social network analysis (SNA) in fraud detection is used primarily to:
Answer: Identify connections between claimants, providers, and attorneys involved in fraud rings
SNA maps relationships between parties to uncover fraud rings by revealing hidden connections among claimants, medical providers, repair shops, and legal representatives.
When a policyholder reports their vehicle stolen but surveillance footage shows them parking it in a remote location, the underwriter should flag this as a potential:
Answer: Vehicle 'give-up' fraud
A 'give-up' scheme occurs when an insured intentionally abandons or hides their own vehicle to report it stolen and collect the insurance proceeds.
Which document is most critical in detecting workers' compensation premium fraud through payroll underreporting?
Answer: Annual payroll audit report
Annual payroll audits compare actual payroll records against amounts declared at policy inception, revealing underreporting used to reduce premium obligations.
An insured who intentionally conceals a prior bankruptcy when applying for a surety bond is committing:
Answer: Material misrepresentation on the application
Intentionally hiding material information such as prior bankruptcy on a surety bond application constitutes material misrepresentation, which can void the bond.