CU Fraud Identification and Mitigation 2

Question 1

Which red flag is most commonly associated with premium diversion fraud in insurance?

Accepted Answer

Agent remitting partial premiums while retaining the difference

Answer

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.

Question 2

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:

Accepted Answer

Arson-for-profit fraud

Answer

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.

Question 3

The SIU (Special Investigations Unit) is primarily responsible for:

Accepted Answer

Investigating claims with indicators of potential fraud

Answer

SIUs investigate claims that exhibit fraud indicators, gathering evidence and coordinating with law enforcement when necessary.

Question 4

An applicant for disability income insurance who overstates their income to obtain a higher benefit limit is committing which type of fraud?

Accepted Answer

Application fraud

Answer

Misrepresenting income on an insurance application to obtain a higher benefit limit constitutes application fraud, which occurs at the policy inception stage.

Question 5

Which analytical technique involves comparing a claimant's current loss patterns against a statistical model of expected losses to detect anomalies?

Accepted Answer

Predictive modeling

Answer

Predictive modeling uses statistical algorithms to identify claims that deviate significantly from expected patterns, flagging them for further fraud investigation.

(CU) Certified Underwriter Practice Test

(CU) Certified Underwriter Practice Test

CU Fraud Identification and Mitigation 2