Study 3 - Authority, Provisions & Enforcement

Question 1

Which impact of insurance fraud is described as harm against the person?

Answer 1

Consumer harm

Question 2

What impact of insurance fraud describes the sharing or paying for financial loss?

Answer 2

Consumer burden

Question 3

What impact of insurance fraud accounts for the loss of consumer confidence and industry identity?

Answer 3

Industry reputational harm

Question 4

Successful fraud management models depend on effective case selection practices to do what?

Answer 4

Execute targeted prevention strategies

Question 5

What key metric is used to design fraud management investigation models?

Answer 5

The frequency by which fraudulent, coercive or corrupt acts are believed to occur

Question 6

Which categories have consumer burden impacts and represents the bulk of financial loss and financial risk to insurers?

Answer 6

Falsified claim fraud, policy fraud, and supplied fraud

Question 7

What are the two parts to enforcement?

Answer 7

Investigation and prosecution

Question 8

What is an insurance regulator?

Answer 8

A government department legislated to licence insurers

Question 9

What is a violation?

Answer 9

A breach of law supported by legislation

Question 10

What must an insurer know to effectively manage fraud?

Answer 10

The violations and contraventions that are enforceable in the jurisdiction

Question 11

Principles of enforcement complaint initiation

Answer 11

-Personal safety
-Threat of deliberate loss
-Prosecution of a concluded case with deterrent value
-Public interest in reporting unenforceable complaint cases
-Additional evidence to bring a case to conclusion

Question 12

Pros of civil proceedings as an enforcement option?

Answer 12

-The timing and scope of proceedings are controllable. There are no dependencies on external bodies as to when or how action will be taken.
-Costs of investigation can be added to the claim by the insurance business or organization initiating the proceeding.
-Resolution of a civil action can include agreement on a court order with specified conditions.
-Contraventions of court-ordered conditions are always enforceable in the future, which can be an excellent fraud prevention tool.

Question 13

Cons

Answer 13

-Upfront legal costs (internal or external) are incurred to see civil proceedings through to the desired conclusion.
-There can be circumstances where it is not practical to recover damages or costs if the
defendant cannot pay.
-There is significant risk of industry reputational harm to situations where civil proceedings initiated by an insurer are withdrawn or no longer pursued because of mounting legal costs.
-This can quickly result in the reversal of the intended effect at the outset of proceedings
because knowledge of the withdrawal empowers the defendant (or others who are likeminded) to continue their behaviour.