QUESTION 1 : Jeremy is involved in an automobile accident but does not have insurance. To be reimbursed for the damages, he gets insurance, waits a short time, and then reports the vehicle as having been in an accident. He has committed an insurance scam known as _____________.
A. Past posting
B. Ditching
C. Churning
D. None of the above
Past posting is a scheme in which a person becomes involved in an automobile accident but does not have insurance. After the accident, the person gets insurance, waits a short time, and then reports the vehicle as having been damaged in some manner, thus collecting for the earlier loss
QUESTION 2 : Workers’ compensation schemes are generally broken into four categories. Which of the following is NOT one of these categories?
A. Double duty fraud
B. Agent fraud
C. Premium fraud
D. Claimant fraud
Workers’ compensation schemes are generally broken into four categories: premium fraud, agent fraud, claimant fraud, and organized fraud schemes. Premium fraud involves the misrepresentation of information to the insurer by employers to lower the cost of workers’ compensation premiums. For example, an employer might understate the amount of the payroll for higher-risk classifications, thus receiving lower-cost premiums. Agent fraud schemes consist primarily of pilfering premiums and conspiring to reduce premiums. Underhanded agents sometimes issue certificates of coverage to the ostensibly insured customer while misappropriating the premium rather than forwarding it to the insurance carrier. Agents might also conspire to alter or improperly influence insurance applications to offer lower premiums to their clients. Claimant fraud involves misrepresenting the circumstances of any injury or fabricating that an injury occurred. Organized fraud schemes are composed of the united efforts of a lawyer, a capper, a doctor, and the claimant. This type of scheme is used not only in workers’ compensation cases but also in other medical frauds, such as automobile
QUESTION 3 : Insurance agent/broker fraud includes which of the following?
A. Premium theft
B. Fictitious payees
C. Fictitious death claims
D. All of the above
Types of insurance agent/broker fraud include: Premium theft—An agent collects the premium but does not remit the payment to the insurance company. Thus, the insured unknowingly has no coverage available upon a qualifying event. Fictitious payees—An agent or a clerk changes the beneficiary on record to a fictitious person and subsequently submits the necessary papers to authorize the issuance of a payment. Fictitious death claims—An agent or employee obtains a fictitious death certificate and requests that a death claim payment be issued. The agent then steals the payment.
QUESTION 4 : All of the following are red flags of fraudulent insurance claims EXCEPT:
A. A theft claim includes a lot of recently purchased expensive property.
B. A fire loss claim does not include family heirlooms or other sentimental items.
C. The insured does not have a history of making insurance claims.
D. A claim is made a short time after the policy’s inception.
Claim fraud might well represent an insurance company’s largest fraud risk. Most claims are legitimate; however, some claims are illegitimate. Red flags of insurance claim fraud include the following: The claim is made a short time after the policy’s inception or after a coverage increase or change. The insured has a history of many insurance claims. The insured previously asked the insurance agent hypothetical questions about coverage in the event of a loss similar to the actual claim. In a theft or fire loss claim, the claim includes a lot of recently purchased, expensive property, but the insured cannot provide receipts, owner’s manuals, or other proof-of-purchase documentation. In a fire loss claim, the claim does not include personal or sentimental items, such as photographs or family heirlooms, that would usually be listed among the lost property. The insured has discarded the claimed damaged property before the adjuster can examine it.
QUESTION 5 : Which of the following is TRUE concerning the different types of workers’ compensation fraud schemes?
A. In an organized fraud scheme, a lawyer, a capper, a doctor, and the claimant often collude to defraud the insurance company
B. In an agent fraud scheme, agents sometimes issue certificates of coverage to the insured customer while pilfering the premium
C. In premium fraud, an employer might understate the amount of the payroll for higher-risk classifications to get a lower-cost premium
D. All of the above
Workers’ compensation schemes are generally broken into four categories: premium fraud, agent fraud, claimant fraud, and organized fraud schemes. Premium fraud involves the misrepresentation of information to the insurer by employers to lower the cost of workers’ compensation premiums. For example, an employer might understate the amount of the payroll for higher-risk classifications, thus receiving lower-cost premiums. Agent fraud schemes consist primarily of pilfering premiums and conspiring to reduce premiums. Underhanded agents sometimes issue certificates of coverage to the ostensibly insured customer while misappropriating the premium rather than forwarding it to the insurance carrier. Agents might also conspire to alter or improperly influence insurance applications to offer lower premiums to their clients. Claimant fraud involves misrepresenting the circumstances of any injury or fabricating that an injury occurred. Organized fraud schemes are composed of the united efforts of a lawyer, a capper, a doctor, and the claimant. This type of scheme is used not only in workers’ compensation cases but also in other medical frauds, such as automobile
QUESTION 6 : Which of the following is the best definition of the automobile insurance scheme known as ditching ?
A. An agent inflates his commissions by pressuring customers to unnecessarily replace existing policies for new ones.
B. An insured has two insurance policies in place and files claims with both.
C. An agent collects a customer’s premium, but he does not remit the payment to the insurance company.
D. An insured falsely reports a vehicle as stolen to collect on an insurance policy.
Ditching , also known as owner give-ups , involves getting rid of a vehicle to collect on an insurance policy or to settle an outstanding loan. The vehicle is normally expensive and purchased with a small down payment. The owner falsely reports the vehicle as stolen while orchestrating its destruction or disappearance in some way, such as by having it stripped for parts, burned, or submerged in a large body of water. In some cases, the owner just abandons the vehicle, hoping that it actually will be stolen.
QUESTION 7 : Jan, a Certified Fraud Examiner for a major insurance company, has received an anonymous tip that an employee in the claims department is processing claims for his own benefit during non-working hours. To gather information about the validity of this tip, Jan should look at which of the following reports?
A. Manual override report
B. Address similarity report
C. Exception report
D. All of the above
Jan could look at several different types of reports to determine the validity of the tip. For instance, address similarity reports electronically compare multiple payments going to the same address. They are extremely useful because they might show a payment defalcation or funds going to another insurance company, broker, or fictitious payee. Additionally, the exception or manual override reports list all exceptions to normal electronic processing, thereby pointing out when a computer is being used outside the normal processing time—such as on the weekend.
QUESTION 8 : __________ is the term used for including additional coverages in an insurance policy without the insured’s knowledge.
A. Churning
B. Sliding
C. Twisting
D. None of the above
Sliding is the term used for including additional coverage in an insurance policy without the insured’s knowledge. The extra charges are hidden in the total premium. Since the insured is unaware of the coverage, few claims are ever filed.
QUESTION 9 : The restitution against loss to a third party when the insured fails to fulfill a specific undertaking for the third party’s benefit is referred to as:
A. Disability insurance
B. An indemnity bond
C. Fidelity insurance
D. Casualty insurance
An indemnity bond reimburses its holder for any loss to third-party beneficiaries when the insured fails to fulfill a specific undertaking for the third party’s benefit. Property insurance indemnifies against pecuniary loss to the insured’s property for specific losses; for example, from fire, theft, or auto collision. Casualty insurance indemnifies against legal liability to others for injury or damage to persons, property, or other defined legal interests because of specified risks or conduct. Fidelity insurance indemnifies against economic loss to the insured because of employee dishonesty. Disability insurance indemnifies against income loss under defined circumstances.
QUESTION 10 : Elizabeth, a grocery store cashier, slips on a wet floor and falls while at work. She is unharmed, but she pretends to suffer an injury from the fall. She files a claim against the store’s workers’ compensation insurance policy, and she collects payments from the insurance carrier. She also misses several weeks of work, even though she is fully capable of working. Under which category of workers’ compensation schemes does Elizabeth’s scheme fall?
A. Agent fraud
B. Claimant fraud
C. Organized fraud
D. Premium fraud
Elizabeth’s scheme is classified as claimant fraud. Claimant fraud involves misrepresenting the circumstances of any injury or fabricating that an injury occurred. Such schemes are perpetrated by employees who stage accidents or exaggerate minor injuries, sometimes in collusion with unethical doctors, to fraudulently receive compensation Workers’ compensation is essentially an employee benefit, entitling those persons who are injured on the job to compensation while they heal. The primary victim of a workers’ compensation scheme is not the employer but the insurance carrier for the employer. It is the insurance carrier who pays for the perpetrator’s fraudulent medical bills and unnecessary absences.
