Insurance Fraud Flashcards
Workers’ compensation schemes are generally broken into four categories. Which of the following is NOT one of these categories?
A. Premium fraud
B. Claimant fraud
C. Agent fraud
D. Double duty fraud
D. Double duty 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 pocketing premiums and conspiring to reduce premiums. Underhanded agents sometimes issue certificates of coverage to the ostensibly insured customer while pilfering 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 injuries.
Which of the following is the best definition of the auto insurance scheme known as “ditching”?
A. An agent collects a customer’s premium, but doesn’t remit the payment to the insurance company.
B. An agent inflates his commissions by pressuring customers to unnecessarily replace existing policies for new ones.
C. An insured has two insurance policies in place and files claims with both.
D. An insured falsely reports a vehicle as stolen to cash in on an insurance policy.
D. An insured falsely reports a vehicle as stolen to cash in on an insurance policy
Ditching, also known as owner give-ups, involves getting rid of a vehicle to cash in on an insurance policy or to settle an outstanding loan. The vehicle is normally expensive and purchased with a small down payment. The vehicle is reported stolen, although in some cases, the owner just abandons the vehicle hoping that it will be stolen, stripped for parts, or taken to a pound and destroyed. The scheme also sometimes involves a homeowner’s insurance claim for the property that was supposedly in the vehicle when it was “stolen.”
A person is involved in an auto accident but doesn’t have insurance. To be reimbursed for the damages, he gets insurance, waits a small amount of time, and then reports the vehicle as having been in an accident. He has committed an insurance scam known as _____________.
A. Ditching
B. Past posting
C. Churning
D. None of the above
B. Past posting CORRECT
Past posting is a scheme in which a person becomes involved in an automobile accident, but doesn’t have insurance. He gets insurance, waits a while, and then reports the vehicle as having been damaged in some manner, thus collecting for the earlier loss.
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. Casualty insurance
B. An indemnity bond
C. Disability insurance
D. Fidelity insurance
B. An indemnity bond
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.
What is a tombstone policy?
A. A fictitious insurance policy
B. A new insurance policy that simply replaces an existing policy
C. An insurance policy that includes additional coverage without the insured’s knowledge
D. None of the above
A. A fictitious insurance policy
An insurance salesperson might submit fictitious policies called tombstone policies to improve his sales record or increase his commissions. The term tombstone policy came into being because agents would literally take names off tombstones to write the new, fictitious policies.
__________ is the term used for including additional coverages in an insurance policy without the insured’s knowledge.
A. Twisting
B. Sliding
C. Churning
D. None of the above
B. Sliding CORRECT
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. For example, motor club memberships, accidental death, and travel accident coverage can usually be slipped into the policy without the insured’s knowledge.
