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    Question

    Late-year reinsurance treaties significantly reduce

    reported loss ratio. Which step is most relevant to fraud risk of “window dressing”?
    A Observe physical inventory Correct Answer Incorrect Answer
    B Send legal letters Correct Answer Incorrect Answer
    C Review terms, timing, and risk transfer tests of treaties Correct Answer Incorrect Answer
    D Confirm payroll balances Correct Answer Incorrect Answer
    E Inspect board attendance Correct Answer Incorrect Answer

    Solution

    Evaluate risk transfer, timing (cut-off), and whether the treaty is genuine.

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