CU Fraud Identification and Mitigation 3

Question 1

Which of the following is an example of 'soft fraud' in auto insurance?

Accepted Answer

Adding pre-existing damage to a legitimate accident claim

Answer

Soft fraud (also called opportunistic fraud) involves exaggerating an otherwise legitimate claim, such as adding pre-existing damage to a real accident claim.

Question 2

A key characteristic that distinguishes 'hard fraud' from 'soft fraud' is:

Accepted Answer

Hard fraud requires deliberate planning to create a false loss event

Answer

Hard fraud involves intentionally creating or staging a loss event (e.g., arson, staged accidents), whereas soft fraud involves exaggerating real losses.

Question 3

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:

Accepted Answer

Employee misclassification fraud

Answer

Misclassifying employees into lower-risk job codes to reduce workers' compensation premiums is a common form of premium fraud that distorts the risk profile.

Question 4

Social network analysis (SNA) in fraud detection is used primarily to:

Accepted Answer

Identify connections between claimants, providers, and attorneys involved in fraud rings

Answer

SNA maps relationships between parties to uncover fraud rings by revealing hidden connections among claimants, medical providers, repair shops, and legal representatives.

Question 5

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:

Accepted Answer

Vehicle 'give-up' fraud

Answer

A 'give-up' scheme occurs when an insured intentionally abandons or hides their own vehicle to report it stolen and collect the insurance proceeds.

(CU) Certified Underwriter Practice Test

(CU) Certified Underwriter Practice Test

CU Fraud Identification and Mitigation 3