Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

C39 Fraud Awareness > Chapter 4 - New Business > Flashcards

Chapter 4 - New Business Flashcards

1
Q

What is the difference between a broker and agent?

A

Broker would work with multiple companies while an agent would work with one company, either independent or as a direct writer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the four obligations that agents and brokers are generally responsible for?

A
  • Make inquiries into nature of the risks to be insured
  • Communicate the info assembled to the insurer
  • Liaise between insurer and insured
  • Respect the terms of any contract made with insurer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define producer

A

A general term used to identify a broker or agent who is licensed to sell insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What three reasons might a producer seek to reduce insurance fraud?

A
  • Leads to unacceptably high loss ratios
  • Cause loss of premium income
  • Tarnish their image and reputation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the five basic functions of selling insurance?

A
  • Getting to know the client
  • Determining the insurance needs
  • Giving advice on insurance protection
  • Obtaining instructions from the client
  • Providing quotes on insurance policies to the client
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the three basic functions of a broker?

A
  • Negotiating coverage with insurers
  • Should a claim occur, facilitate the claim process
  • Choosing the right insurer for the client’s needs
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What three things does the RIBO Act indicate registered insurance brokers must do?

A
  • Pass the applicable exams
  • Be otherwise qualified under this act
  • Have received a certificate to this effect
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the three general areas to be considered when evaluating new customers?

A
  • Business practices
  • Professional standards/interpersonal skills
  • Being aware of how frauds occur
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What three strategies can be applied when dealing with new customers?

A

1) Adopt business practices to develop effective work processes and develop/maintain technical competencies
2) Develop/maintain professional standards of conduct
3) Identify factors that characterize those who are committing fraud, a checklist of red flags

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What can be established by a broker meeting with a potential client?

A
  • Applicant’s requirements in detail
  • Gain knowledge of applicant’s background
  • Explain why certain info is required
  • Explain that misinformation/omissions can jeopardize coverage
  • Evaluate physical hazards
  • Build rapport
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What common questions appear on an application?

A
  • Where does the applicant live?
  • Why is there only a PO Box address?
  • Any address changes recently? Why?
  • Why is there no phone?
  • Is the applicant unable to get a phone?
  • Why does the applicant not have a drivers license?
  • Who is the principle driver?
  • Are there any underage drivers who can be POs?
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Why may a specialized niche market be better equipped to handle insurance fraud?

A
  • Properly underwrite certain high risk insureds
  • Make the best recommendations
  • Impose the right conditions
  • Provide the right type of policy contract
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Define moral hazard

A

Refers to character, business dealings and financial condition of a potential insured

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Define morale hazard

A

Refers to attitude toward their own belongings, could no longer care because items are now insured

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are some examples of financial documents that may be reviewed?

A
  • Business credit info
  • Financial statements
  • Payment records
  • Public filings: law suits, liens, judgments and similar events
  • Historical info: on owners, current management and the company
  • Receiverships or fines
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Define binder

A

A written or oral agreement given by an insurer to insure a risk, pending the issuance of a formal policy. A binder is deemed to be the policy and must be cancelled in the same manner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What authority does a broker or agent have with binders?

A

They may have authority to issue a binder; subject to a dollar or time limit (usually 30 days) while the broker arranges permanent coverage

During this time, the insurer may not have the opportunity to review the entire risk

18
Q

Why may inspections be useful in preventing fraud?

A

They can verify the information in the application

19
Q

Define phantom vehicle

A

A vehicle that does not exist or is already wrecked

20
Q

What are four common types of automobile fraud?

A
  • Phantom vehicles
  • Non existent equipment and accessories
  • Preexisting damage, salvage schemes
  • Import/export frauds
21
Q

What are three considerations for premium?

A

1) Did the insured make a cash payment for the minimum amount required?
2) Did the applicant appear to be unconcerned about the cost of insurance?
3) Was the premium payment late?

22
Q

What are four reasons we may utilize appraisals to schedule items?

A
  • Expensive to replace
  • Subject to low limits of insurance
  • Insured for limited perils
  • Completely excluded
23
Q

What three basic facts must be established to insure an item?

A

The item:

  • Exists
  • Has been fairly/accurately valued
  • Belongs to the insured
24
Q

Define hallmark

A

An official mark present on jewellery. It is a mark of assurance and provides a clear indication of the quality of metal, having been tested at one of the country’s assay offices

25
Q

Define named peril policy

A

A policy which the perils insured against are listed

26
Q

Define all risk policy

A

A policy which covers each and every loss except those that are excluded

27
Q

Define replacement cost coverage

A

A provision generally in property insurance to provide a substitute of the damaged or loss property with something similiar

28
Q

Define actual cash value

A

The fair market value of property, taking into account factors that might augment or reduce the value

29
Q

Define market value

A

The current selling prices for comparable items in the same area

30
Q

Define valued policy

A

A policy that provides a special amount shall be paid in the event of the total loss of the property

31
Q

Define floater policy

A

Additional coverage for moveable items, like jewellery or antiques, beyond what’s included in the basic homeowners. Also called a “rider” or “endorsement

32
Q

What is the usage of a wreckage value endorsement?

A

The cost of repairs or replacement would be covered as long as work is completed within 12 months of the loss, on the same site with like kind/quality materials and for same type of occupancy

33
Q

List some background red flags

A
  • Has no prior carrier
  • Is new to the broker
  • Is new to the area
  • Is “walk in” business
  • Not known to anyone at the brokerage, agency or insurer’s office
  • Asks too many questions about claims
  • Is very knowledgeable about insurance terms or procedures
34
Q

List some contact pattern red flags

A
  • Is never available to meet; only by telephone
  • Comes in at noon, at end of day or on Friday when staff might be rushed
  • Is in a hurry to complete the application/interview
  • Has never been insured before
35
Q

List some application red flags

A
  • Does not live or work nearby
  • Has an address that is not consistent w/ employment or income
  • Records a post office box number as an address
  • Lived at the stated address for less than 6 months
  • Only has a cell number
  • Does not have drivers license or other ID
  • Requires high limits of coverage not consistent with income or lifestyle
36
Q

List some financial red flags

A
  • Deeply in debt
  • Trend of decreasing sales
  • Trend of decreasing profits
  • Prior bankruptcy
37
Q

List some property inspection red flags

A
  • Housekeeping and cleanliness
  • Storage and disposal of waste
  • Storage of combustible material
  • Obstructions on staircases and corridors
  • Security systems
  • Business operating from a home
38
Q

List some location red flags

A
  • Has newer more attractive retail space available
  • Isolated
  • Not located close to a fire station
  • Served by volunteer / part time fire dept
39
Q

List some business operation red flags

A
  • Less than fully active
  • Seasonal operations
  • Areas that are open to traffic but should be closed to public
  • High rate of turnover
  • Involved in employee disputes over working conditions
40
Q

List some appraiser red flags

A
  • Signed by an appraiser?
  • Is letterhead as expected?
  • Qualifications mentioned?
  • Positive statement regarding conflict of interest?
41
Q

List some appraisal red flags

A
  • Fee was calculated base on valuation amount
  • Limiting conditions and basic assumptions not stated
  • Appraiser did not physically view or inspect
  • Valuation procedure not described
  • Valuation method is not stated (rc, acv, etc)
  • Effective date not stated
  • Purpose of statement not stated
42
Q

List some automobile red flags

A
  • Income not compatible with value of vehicle
  • Not owned vehicle for significant amount of time
  • Age of applicant suggests prior ownership of vehicle
  • No previous insurance carrier/proof of coverage
  • Full coverage on older vehicle
  • No lien on expensive vehicle
  • Older vehicle with no reported damage

C39 Fraud Awareness (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions