Insurance Insurance Fraud Detection & Prevention 1 — Questions and Answers
Question 1: Which of the following best describes 'soft fraud' in insurance?
- Fabricating an entirely false claim or accident that never occurred
- Exaggerating a legitimate claim to receive a higher payout than deserved (Correct answer)
- Intentionally destroying property to collect insurance proceeds
- Impersonating another person to obtain an insurance policy
Correct answer: Exaggerating a legitimate claim to receive a higher payout than deserved
Soft fraud involves embellishing or inflating a real claim, such as overstating the value of stolen items or exaggerating injuries from a real accident.
Question 2: What is the primary purpose of the National Insurance Crime Bureau (NICB)?
- To regulate insurance premiums and licensing requirements nationwide
- To partner with insurers and law enforcement to combat insurance fraud and vehicle theft (Correct answer)
- To provide legal defense for insurers facing fraudulent claims
- To issue standardized insurance policy forms across all states
Correct answer: To partner with insurers and law enforcement to combat insurance fraud and vehicle theft
The NICB is a nonprofit organization that works with insurance companies and law enforcement agencies to identify, detect, and prosecute insurance fraud and vehicle theft.
Question 3: Insurance fraud is estimated to cost the US economy approximately how much annually?
- More than $80 billion (Correct answer)
- Approximately $10 billion
- Around $25 billion
- Less than $5 billion
Correct answer: More than $80 billion
According to the FBI and industry estimates, total insurance fraud costs the US economy more than $80 billion annually across all lines including health, auto, and property insurance.
Question 4: Which of the following is a recognized red flag indicator of potential auto insurance fraud?
- The claimant files the report within 24 hours of the accident
- The accident occurs shortly after a new policy is issued or coverage is increased (Correct answer)
- The vehicle involved is less than two years old
- The claimant has had no prior claims in the past five years
Correct answer: The accident occurs shortly after a new policy is issued or coverage is increased
A claim filed shortly after a policy is taken out or coverage is significantly increased is a classic red flag suggesting the policy may have been obtained in anticipation of a fraudulent claim.
Question 5: What is a 'staged accident' in the context of auto insurance fraud?
- An accident recreated for safety training purposes at an insurance company
- A deliberately orchestrated collision intended to generate a fraudulent insurance claim (Correct answer)
- A simulation used by insurers to test their claims processing systems
- An accident scene documented by law enforcement for court presentation
Correct answer: A deliberately orchestrated collision intended to generate a fraudulent insurance claim
A staged accident is a planned collision where participants intentionally cause or fake a crash to file fraudulent auto insurance claims for injuries or property damage.
Question 6: Which federal agency has primary jurisdiction over insurance fraud investigations at the federal level?
- The Securities and Exchange Commission (SEC)
- The Federal Bureau of Investigation (FBI) (Correct answer)
- The Department of Homeland Security (DHS)
- The Federal Trade Commission (FTC)
Correct answer: The Federal Bureau of Investigation (FBI)
The FBI has primary federal jurisdiction over insurance fraud investigations, particularly for schemes that cross state lines or involve federal programs.
Question 7: Which behavior by a medical provider would most clearly constitute insurance fraud?
- Submitting claims within 30 days of service
- Billing for multiple services performed during a single visit
- Billing for procedures or services that were never actually performed (Correct answer)
- Accepting both insurance payment and patient co-pays
Correct answer: Billing for procedures or services that were never actually performed
Billing for services not rendered—known as phantom billing—is a clear form of healthcare insurance fraud, as the provider collects payment for care that was never delivered.
Insurance Insurance Fraud Detection & Prevention 1
Which of the following best describes 'soft fraud' in insurance?