Fraud Identification and Mitigation Flashcards

Which underwriting control is most effective at preventing application fraud at the point of sale?

Answer: Conducting an independent verification of material application data

Independent verification of material data (income, prior losses, occupancy) at the application stage is the most direct control to catch misrepresentations before a policy is issued.

A claimant who is collecting total disability benefits while secretly working full-time is most effectively caught through:

Answer: Social media surveillance and field investigation by the SIU

Social media surveillance and field investigations can provide direct evidence that a disability claimant is engaged in employment or physical activities inconsistent with their claimed condition.

The practice of 'upcoding' in healthcare insurance fraud involves:

Answer: Using a higher-value procedure code than the service actually performed

Upcoding means billing a more complex or expensive procedure code than was actually performed to receive a higher reimbursement from the insurer.

Which of the following is a primary purpose of the Gramm-Leach-Bliley Act (GLBA) as it relates to insurance fraud investigation?

Answer: It governs the privacy of nonpublic personal information used in fraud investigations

GLBA governs how financial institutions, including insurers, collect, share, and protect nonpublic personal information, creating boundaries that fraud investigators must operate within.

An insured who holds multiple life insurance policies with different carriers and conceals this from each insurer on their application may be engaging in:

Answer: Concealment fraud to overinsure beyond insurable interest

Concealing multiple policies to obtain life insurance far exceeding insurable interest limits can constitute fraud, as the intent is financial gain rather than legitimate risk protection.

Which of the following best describes an 'organized retail crime' (ORC) ring's connection to insurance fraud?

Answer: Stolen merchandise is reported as inventory losses on commercial property claims

ORC groups steal merchandise and their confederates inside the business report the goods as legitimate inventory losses under commercial property policies, converting theft proceeds into insurance payments.

A legitimate fraud mitigation strategy that reduces moral hazard by ensuring the insured retains some financial stake in a loss is:

Answer: Coinsurance and deductible provisions

Coinsurance clauses and deductibles reduce moral hazard by ensuring the insured bears a portion of any loss, diminishing the financial incentive to commit fraud.