General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
During a claims review, an insurance professional develops a reasonable belief that a submitted claim is fraudulent. The professional's appropriate course of action is to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
When fraud is reasonably suspected, the professional should report it through the insurer's fraud detection process, which may include the special investigation unit and, when appropriate, referral to the California Department of Insurance Fraud Division. Reporting suspected fraud protects the premium pool and supports the state's anti-fraud efforts. Paying or ignoring suspicious claims facilitates fraud.
Why the other options are wrong
- B) Paying a suspected fraudulent claim defeats the insurer's duty to investigate and invites more fraud.
- C) Detecting and reporting fraud is a recognized professional and legal responsibility in the insurance business.
- D) Claimant information is confidential; publicizing a name would violate privacy protections.
Memory hook
Smell fraud? Route it up the chain. Report to the SIU or the Fraud Division, not the rumor mill.