IAMI CMFI cheat sheet

Marine insurance is uberrimae fidei (utmost good faith): the assured must disclose every material circumstance known to them; materiality is judged by whether it would influence a prudent underwriter's rating or acceptance decision.

Indemnity principle: recovery restores the assured to pre-loss financial position, never profit. Over-insurance, double insurance, or recovery exceeding actual loss is a classic fraud signal.

Insurable interest must exist at the time of loss (marine cargo) or at inception (hull); absence of insurable interest voids the claim and may indicate a fabricated loss.

Key policy forms: Institute Cargo Clauses A (all risks), B and C (named perils, progressively narrower); Institute Time Clauses – Hulls; P&I cover for third-party liability. Cover scope determines which loss narratives are even plausible.

Marine fraud typologies: staged/synthetic losses, deliberate scuttling, cargo shortlanding exaggeration, phantom cargo, double financing, premium fraud, and claims inflation through padded repair or salvage invoices.

Fraud cost model: insurers load premiums for claims leakage; industry studies estimate fraud adds roughly 5–10% to non-life claims spend, so detection value is measured in leakage avoided plus deterrent effect.

Red flag at portfolio level: a broker, surveyor, or repairer repeatedly appearing across suspicious claims indicates organised collusion rather than isolated opportunism.

Claim lifecycle control points: FNOL intake, policy verification, coverage confirmation, survey appointment, document collection, settlement authority, and recovery/subrogation - fraud controls must exist at each stage.

Timing red flags: claim notified immediately after cover inception, reinstatement, or a coverage increase; loss dated just before expiry; notification delay inconsistent with the alleged event.

Documentation red flags: photocopied or altered invoices, sequential invoice numbers from unrelated suppliers, documents dated after the loss, missing original bills of lading, inconsistent fonts or stamps.

Narrative red flags: vague or evolving accounts, loss description that shifts between interviews, precise values recalled for destroyed goods but no operational detail, story matching a known template.

Financial red flags: insured value far above market value, recent ownership change, unpaid suppliers, the assured in insolvency or with a poor claims history, premium arrears at time of loss.

Physical/technical red flags: damage inconsistent with the stated cause (e.g., water damage without tide marks), no debris or wreckage where destruction is claimed, repair estimates exceeding vessel or cargo value.

Behavioural red flags: unusual urgency for fast settlement, refusal of independent survey, hostility to interview, pressure to accept a cash settlement, claimant unusually knowledgeable about policy wording.

Entity red flags: recently formed companies, virtual offices, directors shared across claimant and supplier, sanctions or adverse media hits, trade references that cannot be verified independently.

Rule of thumb: no single red flag proves fraud; indicators are weighted cumulatively, and each must be documented with its source so the file shows an evidence-based suspicion rather than intuition.

Phantom cargo: shipment never existed; indicators include no vessel tracking record, no port authority movement, and documents unsupported by carrier or terminal data.

Shortlanding and shortage exaggeration: claimed missing quantity exceeds the stow plan, tally records, or container weight data (VGM); cross-check against terminal and customs records.

Over-valuation: goods insured above invoice or market value; compare commercial invoice, letter of credit, customs declaration, and contemporaneous market price.

Double financing and documentary fraud: same cargo pledged to multiple financiers or covered by multiple policies; check for duplicate bills of lading and switch bills of lading.

Route and deviation manipulation: fabricated transhipment or diversion to explain damage or delay; verify against AIS vessel tracking, port logs, and charterparty terms.

Temperature and spoilage claims: reefer claims require download of the reefer data logger; a claim of refrigeration failure contradicted by intact temperature records is a strong indicator.

Container and seal integrity: seal numbers on the bill of lading, gate-in records, and delivery receipt should match; a mismatched or cut seal suggests theft staged as a transit loss.

Cargo fraud control: verify carrier and freight forwarder legitimacy (licensing, FIATA membership), confirm vessel and voyage existence, and reconcile documents across at least three independent sources.

Scuttling indicators: vessel near end of economic life, insured value above market value, recent major machinery defects, crew disembarked before the event, and loss in deep water with no independent witness.

Machinery damage claims: compare the damage mechanism with engine room logs, oil analysis records, alarm history, and class survey reports; unexplained consistency across records suggests fabrication.

Collision claims: cross-check with the other vessel's insurer, port control VTS recordings, AIS tracks, and repair yard invoices; phantom collisions lack a counterparty or third-party report.

Repair invoice inflation: compare yard invoices with classification society damage surveys, independent superintendent reports, and dry-dock day rates for the region and period.

Total loss vs. constructive total loss: CTL declarations shortly before a scheduled special survey or with a repair estimate barely above the insured value merit technical review by an independent naval architect.

Class and statutory records: verify class status, outstanding conditions of class, Port State Control detentions, and survey history; concealed defects breach the seaworthiness warranty and indicate non-disclosure.

Crew and witness checks: interview crew separately, compare statements for consistency, and check crew lists against port immigration records to confirm who was actually aboard.

H&M fraud controls: mandatory independent survey for large claims, hull valuation verification at inception and renewal, and monitoring of vessels trading outside declared limits.

Staged theft: theft alleged from an unsecured location with no forcible entry, no police report, and no alarm or CCTV evidence; genuine theft normally leaves physical traces.

Hijacking red flags: route inconsistent with the declared voyage, no distress or security alert, crew unharmed and unable to explain details, cargo offloaded without documentation.

Piracy verification: cross-check with IMB Piracy Reporting Centre, UKMTO, MSCHOA, and naval patrol records; a piracy event in an area with no reported activity is a strong indicator.

Ransom and kidnap claims: verify through independent channels (flag state, broker, response consultant); fabricated crew abduction claims often fail identity and communication verification.

Cargo identity substitution: stolen goods replaced with low-value or damaged goods before delivery; check seals, weights, and lot or serial numbers at discharge.

Insider collusion: drivers, warehouse staff, or agents with knowledge of route and load; check access logs, phone records, and employment history for links to the loss.

Geographic risk profiling: theft and hijacking concentrate on specific corridors and facilities; a claimed loss location inconsistent with the known risk profile warrants scrutiny.

Dual recovery risk: assured may claim from insurer and also pursue carrier or third party; require subrogation rights and check for undisclosed recoveries.

P&I covers third-party liability: crew injury, passenger claims, cargo damage liability, pollution, wreck removal, and collision liability; each head has distinct fraud patterns.

Exaggerated injury indicators: injury inconsistent with medical records, delayed reporting, pre-existing condition undisclosed, treatment far exceeding clinical guidelines for the diagnosis.

Crew claim verification: check seaman's book, crew list, payroll, and port immigration records; phantom crew claims appear where the person was never signed on.

Jones Act and crew negligence claims: scrutinise employment status, the vessel's unseaworthiness allegations, and whether the injury mechanism matches the ship's actual equipment and layout.

Passenger claims: compare against manifest, ticket records, and onboard medical log; slips and falls alleged on a vessel the claimant did not board are a known fraud pattern.

Medical and legal collusion: repeated clinics, doctors, or lawyers appearing across claims; inflated medical invoices and contingency-fee arrangements are indicators.

Cargo liability claims: distinguish carrier liability under Hague-Visby or Rotterdam Rules from insured cargo loss; duplicate claims to both cargo insurer and carrier are common.

Liability fraud controls: early medical evidence review, independent medical examination, surveillance where lawful, and coordination between P&I club and defence counsel.

Investigation plan elements: scope, allegations, hypotheses, evidence to obtain, resources, timeline, legal constraints, and reporting milestones; written before fieldwork begins.

Evidence hierarchy: original documents and physical evidence outrank copies and statements; digital evidence (AIS, EDI, CCTV, email) must be preserved with hash values and chain of custody.

Chain of custody: record who handled each item, when, where, and why; a broken chain undermines admissibility and credibility in later proceedings.

Interview structure: prepare a topic plan, use open questions first, then funnel to specifics; record verbatim key answers, note inconsistencies, and avoid leading or threatening questions.

Cognitive interviewing: free recall, then reverse-order recall and change of perspective, elicits more accurate detail than direct questioning and reduces suggestibility.

Statement analysis: look for shifts in tense, missing expected detail, over-politeness, and volunteered denials; treat these as leads to test, not proof.

Legal constraints: interviews must respect employment law, privacy law, and the right against self-incrimination; deception-detection technology is restricted or banned in many jurisdictions.

Case file standard: every conclusion must be traceable to an exhibit; an investigator's report should separate established fact, inference, and open question.

Utmost good faith and disclosure: material non-disclosure or misrepresentation can void the policy; the remedy depends on the jurisdiction and the nature of the breach.

Fraud Act 2006 (England and Wales): fraud by false representation, failing to disclose, and abuse of position; insurance fraud is prosecuted under these offences.

Insurance Fraud Bureau and IFED (UK): industry and police bodies coordinate marine and cargo fraud intelligence; reporting to them is a recognised control.

Data protection: GDPR and equivalent regimes restrict sharing claimant data; information sharing must rely on a lawful basis such as fraud prevention or legal obligation.

Sanctions and AML: OFAC, EU, and UN sanctions screening of vessels, cargo, and counterparties is mandatory; sanctions breaches are strict liability in many regimes.

Marine-specific regulation: SOLAS, MARPOL, MLC 2006, ISM Code, and flag-state rules shape what records exist and what conduct is unlawful at sea.

Ethics: investigators must avoid entrapment, respect confidentiality, disclose conflicts of interest, and never fabricate or suppress evidence.

Cross-border cases: jurisdiction, applicable law, and enforceability of judgments differ; coordinate local counsel before formal steps such as search or arrest of property.

Suspicious Activity Report (SAR) or equivalent: filed with the insurer's fraud unit or national authority; must be factual, dated, and supported by exhibits, without speculative conclusions.

Recovery routes: subrogation against carriers or third parties, salvage and general average contribution, restitution from the fraudster, and civil action for deceit or conspiracy.

Reservation of rights: issue promptly where coverage or fraud is in question; failing to reserve can waive the insurer's right to decline later.

Fraud outcome categories: repudiation, recovery of paid sums, referral for prosecution, and policy voidance; each requires documented reasoning and consistent decision-making.

Prevention controls: verification of insureds and brokers at onboarding, hull and cargo valuation checks, sanctions screening, and red-flag scoring at FNOL.

Claims analytics: benchmarking claim frequency, value, and geography against peer data; outlier detection flags files for investigation before payment.

Training and awareness: claims handlers and surveyors trained on marine fraud typologies; a culture where staff can escalate suspicion without penalty improves detection.

Metrics: track referral rate, investigation cycle time, recovery rate, and repudiation rate to demonstrate the fraud control programme's effectiveness to management and regulators.

Utmost good faith requires the assured to disclose all material circumstances; failure may allow the insurer to avoid the policy.

The indemnity principle means recovery cannot exceed the actual loss; over-insurance and double insurance are fraud indicators.

Insurable interest must exist at the relevant time; absence voids the claim and may signal a fabricated loss.

Institute Cargo Clauses A, B, and C define progressively narrower cover; the loss narrative must fit the applicable clause.

Common marine fraud typologies include staged losses, scuttling, phantom cargo, exaggerated shortlanding, and padded repair invoices.

Fraud leakage is estimated at roughly 5–10% of non-life claims spend, so prevention has measurable financial value.

Repeat appearances of the same broker, surveyor, or repairer across suspicious claims suggest organised collusion.

Timing red flags include claims right after inception or reinstatement and losses dated just before expiry.

Document red flags include altered or photocopied invoices, missing originals, and documents dated after the loss.

Narrative red flags include vague, evolving accounts and stories that match a known fraud template.

Financial red flags include insured value above market value, recent ownership change, and premium arrears.

Physical red flags include damage inconsistent with the stated cause and missing debris or wreckage.

Behavioural red flags include urgency for fast settlement, refusal of survey, and hostility to interview.

No single red flag proves fraud; indicators are weighted cumulatively and each must be documented with its source.

Phantom cargo is exposed by absence of vessel tracking, port authority records, and terminal movement data.

Shortage claims should be tested against stow plans, tally records, and verified gross mass data.

Over-valuation is detected by comparing invoice, letter of credit, customs declaration, and market price.

Double financing appears through duplicate or switch bills of lading and multiple policies on the same cargo.

Reefer claims require the data logger download; intact temperature records contradict a refrigeration failure claim.

Seal numbers on the bill of lading, gate-in record, and delivery receipt should match to rule out staged theft.

Carrier and forwarder legitimacy should be verified through licensing and independent trade references.

Scuttling indicators include an ageing vessel, insured value above market value, and crew disembarked before the event.

Machinery claims are tested against engine logs, oil analysis, alarm history, and class survey reports.

Collision claims require a counterparty, VTS recordings, AIS tracks, and yard invoices to be credible.

Repair inflation is detected by comparing yard invoices with class surveys and regional dry-dock day rates.

A constructive total loss declared just before a special survey merits independent naval architect review.

Outstanding conditions of class and Port State Control detentions can indicate concealed unseaworthiness.

Crew statements should be taken separately and checked against port immigration records.

Staged theft usually lacks forcible entry, alarm records, CCTV evidence, and a police report.

Hijacking claims are tested against route consistency, distress alerts, and crew accounts.

Piracy events should be verified with the IMB Piracy Reporting Centre, UKMTO, and naval patrol records.

Ransom and kidnap claims require independent verification through flag state and response consultants.

Cargo substitution is detected by checking seals, weights, and serial or lot numbers at discharge.

Insider collusion is indicated by access logs, phone records, and employment links to the loss.

Claimed loss locations should be compared with known theft and hijacking risk corridors.

P&I covers third-party liability including crew injury, passenger claims, cargo liability, pollution, and wreck removal.

Exaggerated injury is indicated by delayed reporting, undisclosed pre-existing conditions, and treatment beyond clinical guidelines.

Phantom crew claims are tested against the crew list, seaman's book, payroll, and immigration records.

Passenger claims should be checked against the manifest, ticket records, and onboard medical log.

Repeated clinics, doctors, or lawyers across claims suggest medical or legal collusion.

Cargo liability claims may be duplicated between the cargo insurer and the carrier.

Early medical evidence review and independent medical examination are core liability fraud controls.

A written investigation plan should state scope, hypotheses, evidence needed, resources, timeline, and legal constraints.

Original documents and physical evidence carry more weight than copies and verbal statements.

Digital evidence must be preserved with hash values and a documented chain of custody.

Interviews should begin with open questions and funnel to specifics, avoiding leading or threatening language.

Cognitive interviewing uses free recall, reverse-order recall, and change of perspective to improve accuracy.

Statement analysis findings are investigative leads, not proof of deception.

Every conclusion in the case file must be traceable to a specific exhibit.

Material non-disclosure or misrepresentation can void a policy, with remedies varying by jurisdiction.

The Fraud Act 2006 covers false representation, failure to disclose, and abuse of position in England and Wales.

The Insurance Fraud Bureau and IFED coordinate industry and police intelligence on insurance fraud.

GDPR and equivalent regimes restrict claimant data sharing; a lawful basis such as fraud prevention is required.

OFAC, EU, and UN sanctions screening of vessels, cargo, and counterparties is mandatory.

SOLAS, MARPOL, MLC 2006, and the ISM Code shape the records and conduct relevant to marine investigations.

Investigators must avoid entrapment, disclose conflicts, and never fabricate or suppress evidence.

A suspicious activity report must be factual, dated, and exhibit-supported, without speculative conclusions.

Recovery routes include subrogation, salvage and general average contribution, restitution, and civil action.

A reservation of rights should be issued promptly where coverage or fraud is in question.

Outcomes include repudiation, recovery of paid sums, referral for prosecution, and policy voidance.

Prevention controls include onboarding verification, valuation checks, sanctions screening, and FNOL red-flag scoring.

Claims analytics benchmark frequency, value, and geography to flag outliers before payment.

Metrics such as referral rate, cycle time, recovery rate, and repudiation rate demonstrate programme effectiveness.