State RegulationsNY specificDifficulty 1/5
A New York insurer's special investigations unit suspects that a disability claim is fraudulent. Under N.Y. Ins. Law §405, the insurer must report the suspected fraudulent insurance act to
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under N.Y. Ins. Law §405, an insurer with knowledge of a suspected fraudulent insurance act must report it to the Department of Financial Services so the Department's fraud investigators can act on it. Mandatory reporting is the detection engine of the Insurance Frauds Prevention Act — secrecy would let the same scheme victimize other carriers.
Why the other options are wrong
- A) The producer who wrote the business is not the statutory recipient; the report goes to the Department of Financial Services.
- B) The NAIC is a standard-setting support organization; New York fraud reports are directed to New York's regulator under §405.
- C) Preserving the employer's payroll records is not the duty the statute imposes; the insurer must report the suspected fraud to DFS.
Memory hook
Suspect fraud? Report it to DFS — the carrier's duty under §405.