CCA CCA Fraud Detection and Prevention 1 — Questions and Answers
Question 1: Which type of insurance fraud involves a policyholder exaggerating an otherwise legitimate claim?
- Hard fraud
- Soft fraud
- Opportunistic fraud
- Both B and C (Correct answer)
Correct answer: Both B and C
Soft fraud (also called opportunistic fraud) occurs when a policyholder inflates a genuine claim, such as adding extra items to a theft loss or exaggerating injury severity.
Question 2: A 'staged accident' is an example of which type of insurance fraud?
- Soft fraud
- Hard fraud (Correct answer)
- Premium evasion
- Medical billing fraud
Correct answer: Hard fraud
Hard fraud involves deliberately causing or fabricating a loss, such as staging a car accident, to collect insurance proceeds.
Question 3: Which of the following is a common red flag for auto insurance fraud?
- Claim filed on the same day as the accident
- Policy purchased shortly before the reported loss (Correct answer)
- Multiple witnesses at the accident scene
- Vehicle photographed at the scene by police
Correct answer: Policy purchased shortly before the reported loss
Purchasing a policy shortly before a reported loss is a classic fraud indicator, suggesting the 'loss' may have been pre-planned.
Question 4: What organization in the US serves as the primary repository for insurance fraud information shared among insurers?
- NAIC
- ISO/Verisk
- FBI
- NICB (National Insurance Crime Bureau) (Correct answer)
Correct answer: NICB (National Insurance Crime Bureau)
The NICB is a non-profit organization funded by insurers that works with law enforcement to detect and prevent insurance fraud and vehicle theft.
Question 5: A claimant submits medical bills for treatment on a date when records show they were out of the country. This is best described as:
- Soft fraud through exaggeration
- Medical billing fraud / hard fraud (Correct answer)
- Premium evasion
- Material misrepresentation at policy inception
Correct answer: Medical billing fraud / hard fraud
Submitting bills for treatment that never occurred is a form of hard fraud — in this case, medical billing fraud involving fabricated records.
Question 6: When an adjuster suspects fraud, the FIRST action they should typically take is:
- Deny the claim immediately
- Alert law enforcement without telling the insurer
- Document the red flags and refer the file to the Special Investigations Unit (SIU) (Correct answer)
- Contact the claimant to confront them about the suspicion
Correct answer: Document the red flags and refer the file to the Special Investigations Unit (SIU)
Adjusters should document suspicious indicators and refer the claim to the insurer's Special Investigations Unit (SIU) rather than acting unilaterally or confronting the claimant.
CCA CCA Fraud Detection and Prevention 1
Which type of insurance fraud involves a policyholder exaggerating an otherwise legitimate claim?