Fraud Indicators and Red Flags in Underwriting
This domain tests whether you can spot deception at the proposal stage, before cover is granted. The exam rewards indicator-based reasoning and a clear understanding that a red flag is a trigger for enquiry, not a finding of fraud.
Application-stage indicators
- Claims history: gaps, suspiciously clean records after long driving experience, prior declined or cancelled cover found via CUE.
- Identity and address: multiple policies at one address, PO boxes, address inconsistent with licence or vehicle keeper data.
- Fronting: a parent or spouse named as proposer and main driver while a young or high-risk driver is the actual user.
- Ghost broking: an intermediary using edited documents, unusual payment routes, or contact details that do not match the broker register.
- Vehicle factors: undisclosed modifications, imports, high-value or cloned vehicles, mileage inconsistencies.
- Payment and timing: cash or multiple cards, rapid cancellation and reinstatement, inception shortly before a loss.
Screening tools
- CUE, the Motor Insurance Database, MIAFTR, the Insurance Fraud Register, electoral roll and credit data.
- Rules and scoring to prioritise referral to a special investigation unit.
Worked example
A 19-year-old is added to a policy where the mother is policyholder and main driver. The car is kept at a university address, the mother insures another car with 12 years' no-claims discount, and the young driver's social media shows daily use. This is a fronting indicator set, not proof. Confirm through telematics, DVLA keeper data and a recorded call before deciding the remedy.
Traps
- Relying on a single indicator; indicators cluster.
- Ignoring the Equality Act 2010 - postcode or ethnicity proxies must not drive decisions.
- Missing over-disclosure and coaching as indicators in their own right.