(Editor's Note: This article has been contributed by JanineJohnson, an analytics manager at the ISO Innovative Analytics (IIA)unit of Verisk Analytics (www.verisk.com).

It's no secret: Fraudulent claims continue to be an insidiousproblem for the industry, costing P&C insurers and consumers anestimated $40 billion a year (according to the FBI). Of course,that figure stands to skyrocket as the National Insurance CrimeBureau (NICB) reports that questionable claims (QCs) increased anunprecedented 20 percent during the first half of 2012 whencompared to the same period in 2011.

Fraud is highly adaptive, responding to external stimuli andevolving over time. Historically, fraud has shifted from primarilyvehicle thefts and property arson to the casualty side, as specialinvestigative units (SIUs) clamped down on property scams. Casualtyclaims are notoriously more complex, involving collusion betweenphysicians and lawyers and larger dollar amounts. These sumsdraw the attention of organized rings involving medicalprofessionals and criminal syndicates.