In agent fraud schemes, what is a common tactic?

• A. Pilfering premiums and conspiring to reduce premiums
• B. Filing exaggerated claims
• C. Underwriting new policies
• D. Creating fictitious providers

Answer: (A)

Misappropriation of premiums is a common tactic in agent fraud. Agents who handle premium money can skim funds or conspire to reduce reported premiums, diverting money away from the insurer. This centers on the cash flow the agent controls and is a frequent way fraudsters exploit their access, which is why internal controls like separate receipt handling, prompt remittance, and regular reconciliations are critical safeguards.

Exaggerating claims is more about inflating losses claimed to the insurer, a tactic typically seen in claims fraud rather than how an agent profits. Underwriting new policies is a normal, legitimate function of the insurer, not a fraudulent tactic. Creating fictitious providers is a fraud tactic often seen in healthcare or service-facility fraud, not specifically a standard agent fraud tactic.