IAI SP6 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Fraud definition

Intentional deception made for personal or organisational gain, distinguished from error or negligence by the presence of dishonest intent and the prospect of benefit to the deceiver.

First-party fraud

Fraud committed by the policyholder against their own insurer, typically by exaggerating, fabricating or staging a claim, or by misrepresenting risk at application.

Soft fraud

Opportunistic exaggeration or padding of a genuine claim, often committed by otherwise honest policyholders, and generally lower value and less sophisticated than organised hard fraud.

Claims padding

Inflating a genuine claim by adding non-existent or exaggerated items, such as extra damaged goods or inflated repair costs, to increase the payout received.

Organised fraud ring

A group coordinating staged accidents, fictitious claims or identity fraud across multiple policies to extract repeated payouts, often revealed by shared links between claimants.

Contract avoidance

A civil remedy allowing the insurer to treat the policy as never having existed where the policyholder made a fraudulent misrepresentation or non-disclosure inducing the contract.

Legitimate interest

A lawful basis under data protection law permitting processing of personal data for fraud prevention, subject to necessity, balancing and transparency obligations to the individual.

Suspicious activity report

A report made to the financial intelligence unit under anti-money-laundering rules when an employee suspects money laundering or terrorist financing, with tipping-off restrictions applying.

Proportionality

The principle that investigation and fraud controls must be no more intrusive than necessary to achieve the legitimate aim, balancing insurer interests against the claimant's rights.

Non-disclosure red flag

An application signal where material facts are omitted or misstated, such as undisclosed claims history, occupation or usage, suggesting possible deliberate concealment.

Premium payment red flag

Underwriting signal where a policy is cancelled soon after inception, paid from a third-party account, or repeatedly fails direct debit, indicating possible fraud motive.

Risk mismatch indicator

A discrepancy between declared risk and observable facts, such as a low-risk occupation with a high sum insured or vehicle use inconsistent with the stated purpose.

Fraud database screening

Checking an applicant or claimant against shared fraud registers and prior-insurer data at quote, inception and claim stage to identify known or suspected fraudsters.

Late notification red flag

A claim reported long after the alleged incident, or immediately after inception or a cover increase, suggesting the loss may be fabricated or pre-planned.

Document alteration

A claim red flag where receipts, invoices or reports show overwriting, mismatched fonts, sequential numbers or missing originals, indicating possible fabrication.

Loss clustering

A pattern where the same claimant, address, bank account, repairer or witness appears across multiple claims, suggesting organised or repeat fraud.

Financial motive indicator

Claim red flags suggesting need for money, such as arrears, insolvency, recent large purchases, or a sum insured closely matching an outstanding debt.

Chain of custody

A documented record showing who obtained, handled, stored and transferred each item of evidence, with dates and signatures, to preserve its integrity and admissibility.

Digital evidence hashing

Capturing a cryptographic hash of digital material at acquisition so later changes can be detected, supporting authenticity and integrity of the evidence.

Corroboration

Confirming a claimant's account with independent sources, such as employers, hospitals, repairers or police records, rather than relying on a single uncorroborated statement.

Contemporaneous notes

Records made at or near the time of an investigation activity, documenting facts, times, sources and decisions, which carry more evidential weight than later reconstructions.

Cognitive interview

A structured interviewing technique using context reinstatement, reverse-order recall and change of perspective to improve the completeness and accuracy of a witness's memory.

Open questioning

Asking questions that invite a free narrative account without suggesting an answer, used before specific probing to reduce contamination of the interviewee's recall.

Leading question

A question that suggests the desired answer or introduces facts not yet stated, which can distort recall and reduce the evidential value of a statement.

Statement verification

Reading the statement back to the witness, correcting errors with initialled amendments, and obtaining signature so that the record is in their own words and confirmed.

Three lines of defence

A governance model where business units own fraud risk, risk and compliance provide oversight, and internal audit gives independent assurance over the control framework.

Segregation of duties

A preventive control separating authorisation, processing and reconciliation so that no single person can both commit and conceal a fraudulent transaction.

Key risk indicator

A measurable metric tracking fraud exposure or control performance, such as claims frequency by channel, average claim value, detection rate or recovery rate.

Rules-based detection

Fraud analytics using fixed thresholds and logical conditions, such as a claim within thirty days of inception, which is transparent but generates false positives.

Predictive fraud model

A statistical model trained on historical labelled claims to output a fraud probability score, evaluated using precision, recall and area under the ROC curve.

Network analysis

An analytic technique mapping relationships between claimants, addresses, accounts, repairers and witnesses to reveal hidden links and organised fraud clusters.

Conflicts of interest

Personal or financial connections between an investigator or decision-maker and a claimant, repairer or supplier, which must be declared and managed or the person recused.