West Virginia Adjusters Practice Exam

What should an adjuster do if they uncover fraudulent activity during an investigation?

1. Ignore it to protect the client

2. Report the findings to the appropriate authority

3. Discuss it with the insured directly

4. Consult with other adjusters for advice

The correct answer is: Report the findings to the appropriate authority

When an adjuster uncovers fraudulent activity during an investigation, the appropriate course of action is to report the findings to the appropriate authority. This is crucial for several reasons. First and foremost, fraud undermines the integrity of the insurance industry and can lead to increased costs for all policyholders. By reporting the suspected fraud, the adjuster fulfills their ethical and legal obligation to promote fair practices within the profession. Furthermore, failing to report fraudulent activities could lead to legal repercussions for the adjuster, including potential liability if the fraud affects the outcome of claims processing. There are usually established protocols and laws governing how such situations should be handled, which include reporting to either internal fraud units or external regulators. Complying with these protocols protects not only the adjuster but also the insurer and the broader community from the potential harms associated with fraud. The other options may seem tempting but would not uphold the necessary standards of conduct. Ignoring the fraudulent activity could result in more significant repercussions for the client and the insurance company. Discussing the fraudulent activity directly with the insured could compromise the investigation and possibly alert the wrongdoer. Consulting with other adjusters for advice may provide support but does not address the immediate necessity of reporting to authorities who can take appropriate action.