Question

The treasurer of XYZ insurance discovers that the treasurer's company is being investigated by the banking and insurance commissioner. Because the company is in weak financial condition, the treasurer instructs the company claims manager to delay recording several large claims settlements. In this situation, the treasurer may be found guilty of which of the following?

a) Making false financial statements
b) Commingling funds
c) Committing an unfair claim practice
d) Practicing unfair discrimination

Answer 1

The treasurer at XYZ insurance could be guilty of making false financial statements by instructing delayed recording of claims to misrepresent the company's financial status.

Step-by-step explanation:

The treasurer of XYZ insurance instructs the claims manager to delay recording several large claims settlements because the company is under financial scrutiny and is in weak financial condition. In this situation, the treasurer may be found guilty of making false financial statements.

Delaying the recording of claims to manipulate the company's financial statements is a form of financial misrepresentation. This kind of action is considered fraudulent as it presents a false picture of the company's financial health to investors, regulators, and the public.