Auto give-ups, stolen vehicles, arson, padded injuries, inflated medical bills and disability exaggerations are just a few of the scams that play out in the insurance arena daily.

According to the Insurance Research Council, 1 in 3 Americans believes it is acceptable to inflate a claim to pad a deductible. One in 4 believes it is acceptable to do this in order to recoup previously paid premiums.

The reality is that every day insurers are faced with situations that are outright fraud or contain elements of fraud. In fact, it is estimated that 21-36 percent of insurance claims contain an element of fraud. The continuing poor economic conditions complicate matters, creating a financial motive for many who would never consider such drastic action in “good times.”

The Bad Apples

So how can insurers, which are charged with accurately resolving claims in a timely manner, discern the good from the bad? How can claims adjusters, often doing more work with fewer resources, take the time to properly identify and investigate claims containing “red flags” or possible indicators of fraud?

On the surface, this may seem like an insurmountable task. Fortunately, however, there are steps insurers can take to tackle this dilemma.

First and foremost, do not go it alone. Gone are the days when we got into our company cars and hit the streets to look for clues to unravel the mystery behind the claim. While this may have been the optimal way to handle claims a generation ago, these investigations can be performed more expeditiously by leveraging available technology, such as link analysis and indexing information.

Of course, it doesn't hurt to have feet on the street, either. Having the ability to canvass for witnesses, inspect sometimes nonexistent clinics, measure vehicular damage and take claimant statements in the presence of their attorney can provide invaluable insight into an investigation. When used in conjunction with modern technology, this approach can often make or break a case.

Curiosity Fosters Greatness

Great adjusters become great because they ask a lot of questions throughout the claims process. They ask questions not only of parties to a claim but of management, as well.

A claims professional must follow his or her gut, as it is rarely wrong. If something doesn't seem right with a claim, then it very well may not be. The key is to differentiate between the objective and subjective, which distinguishes between the ordinary and extraordinary.

Great adjusters take the time to dig deeper. They will not only question the parties to the claim but will also look for discrepancies. They will inquire about the claimant's medical treatment and also obtain physical descriptions of the pertinent clinics and providers. They will ask for directions from the home to the chiropractor's office.

The list of what the “great” adjuster will do goes on and on. At the end of the day, this investigative work may show that a seemingly ordinary claim was actually staged.

Adjusters will then take advantage of available technology to search for prior claims and analyze associations between the claimants, medical providers and attorneys. They will look for key patterns or connections, which in turn can point to larger, more organized activity.

While many organizations are scaling back on manpower for a variety of reasons, it is important to recognize that this increased demand on productivity can take a toll on investigative capacity. By leveraging credible and experienced external business partners, insurers can maintain a competitive advantage. A variety of such partners can provide investigative resources, forensics, accident reconstruction and demographic information for adjusters to utilize throughout the course of their various claims investigations.

Special Reports /

Red Flags: Digging Deeper in Claims Investigation

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