The cost of insurance fraud is staggering with estimates rangingfrom $80 to 120 billion annually. Many insurance companies havestarted to take anti-fraud efforts more seriously in recent years,but why? Perhaps this is a result of better analysis to justify ROIor insurance executives are simply trying to hedge against whatappears to be a growing threat. Whatever their motives, understandthere are numerous reasons insurance companies should be taking acloser look at their special investigations unit (SIU), butmore specifically, their overall fraud strategy.

But what is strategy in an insurance fraud context? Large-scaleanti-fraud efforts are a relatively new frontier in the insuranceworld. Unlike marketing, underwriting, or customer service,fighting fraud has rarely gotten lots of attention, but thefundamentals of a good strategy are still the same. Collectinformation, form decisions based on analysis, and be willing toadapt as fraud does.

Unfortunately, some companies are taking a more arbitraryapproach to the design of their SIU and overall fraud strategy, buthere are some tips to ensure your company is on the righttrack: