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6 Things You Need to Know About Insurance Fraud Investigations

Insurance fraud is a thriving multi-billion dollar industry, costing the American economy over $80 billion in 2006 alone. It’s not just a few bad consumers hurting a few big insurance companies either. Insurance fraud can involve falsely denied payouts and lost paperwork by insurance companies, organized crime rings crashing cars, contractors over-billing, and your average Joe simply overestimating the value of his 1996 Ford Mustang. Insurance fraud increases premiums for consumers and makes whole system more costly – all thanks to a few dishonest actors. That’s where trained insurance fraud investigators (like those in the Trustify network) come in.

Here’s 5 things you need to know about insurance fraud investigation tactics, methods, and trends:

1. Insurance Fraud is Common

Fraud is more common than people think. This is in part because when people think of insurance fraud, they think of “hard” insurance fraud, which actually represents the minority of cases. Burning down a building or crashing a car on-purpose is what’s called hard insurance fraud because the source of the claim was entirely manufactured. On the other hand, soft insurance fraud is far more common because it consists of simply inflating the value of a legitimate claim. This type of fraud takes up the majority of an insurance fraud investigators’ time.

2. Data Analysis Can Flag Cases – but it Can’t Prove Fraud

While statistical analysis and machine learning might be making the job of flagging potential fraudulent claims easier for medical, automotive, and general insurers, but the job of actually investigating insurance fraud still falls to specialized professionals like private investigators. When a potentially fraudulent claim comes across an insurance investigator’s desk they have a variety of tactics they can employ, from old school stakeouts to advanced web research to gather evidence to justify denying a claim, or even bringing legal action against a claimaint.

3. Stakeouts and Surveillance are Still Important Ways of Catching People

Why is surveillence so important? Surveillence can make sure someone’s claims are backed up by their behavior. If someone is claiming an injury, then their activities and lifestyle should be consistent with that. When it’s not (as it was in the case where we watched an individual claiming a back injury take a powerlifting class), you most likely have a case of fraud – and surveillance can provide compelling evidence of that.

Often used to investigate workers compensation fraud or to look into medical claim stakeouts, surveillance is what it sounds like. An investigator watches and waits for someone to appear, and then follows them and observes them. Gathering evidence in this way is legal, but tricky. Follow your mark too closely and not only will you be “made”, but you could be charged with harassment. Private investigators know how to conduct this sort of surveillence safely and discreetly.


4. Social Media Can be Used to Catch Fraudsters More Often Than You Think

You’d think that people engaged in fraud would be careful – but you’d be wrong. From boasting about fraudulent claims to posting photos of themselves skiing while claiming a leg injury, you’d be shocked at how often people post incriminating evidence publicly on social media. This makes social media investigations an incredible valuable tool in an insurance investigator’s arsenal.

However, sometimes things get a little more complicated than simply screen-shotting some photos. For every person blithely uploading damning pictures and statuses, there are people with enough smarts to attempt to hide evidence of their wrongdoing. Fraudsters have been known to create alternate social media accounts to hide their actions, or up their privacy settings in the hopes of avoiding scrutiny.

A murder suspect is discovered via her facebook posts

Fortunately, private investigators are skilled at tracking down all social media accountsassociated with an individual, and collecting usable evidence from them. Even when someone is attempting to hide activities or evidence of fraud, slip ups can still be found with careful analysis. For instance, friends or family could post photos of them they aren’t aware of, or the location metadata from a photo might provide evidence of travel that’s inconsistent with their claim.

5. Background Research Can Point Investigators in the Right Direction

Statistical analysis might raise some red flags, but getting into the nitty-gritty of someone’s particulars can reveal that an individual is worthy of further investigation. For instance, car crash rings operate in organized groups over extended periods of time. A routine check into the arrest and criminal record of an individual could reveal convictions for fraud in the past that might indicate that they are still an active member of one of these organizations.

Other parts of a suspected fraudster’s past can indicate a claim is likely to be false or inflated. Investigators can look into someone’s financial well-being, check credit scores, find past convictions, and even find out whether someone has a history of disputes with other insurance companies. This type of financial evidence can provide interesting insights into a case – for instance, financial distress is a major cause of insurance fraud, and a history of past disputes could indicate a propensity to fraud.

Information from background research may not provide absolute proof of fraud, but it almost always gives grounds for placing a claim under even greater scrutiny. Armed with this data, an insurance investigator can act decisively to determine whether a claim has merit.

6. Hands-on Investigations Get Answers in Difficult Cases

At the end of the day, an insurance investigation needs to prove that whatever is stated by all parties is complete and correct – and sometimes this means putting boots on the ground. Fortunately, this sort of field work is a private investigator’s speciality. Fieldwork can involve interviewing each person involved with the claim, from claimant to agent to contractors and more, making sure that their stories stack up.

an investigator takes a photograph

This sort of work can uncover unexpected twists in a case. Sometimes the claimant is an unwitting victim of overbilling and other sorts of accounting fraud from a contractor like a doctor or an auto repair shop. Sometimes both contractor, claimant, and insurance company are being defrauded by an unscrupulous insurance agent who’s selling fake or falsified policies. By talking to each participant, it’s often possible to find discrepancies in their statements that can lead to the quick identification of the fraudster.

Sometimes physical evidence is important too. Private investigators are skilled at collecting and analysing all sorts of useful information from a scene, including photos, paperwork, and more.



Insurance fraud investigations are an important part of any insurance company’s risk management strategy. Fraudulent claims hurt both the finances of the insurance industry, as well as the general public by raising premiums. In extreme cases, insurance fraud can directly affect the lives of those involved through unnecessary (and dangerous) medical procedures, and staged (but still deadly) automobile crashes. Insurance fraud investigators can sort out truth from fiction, saving both unwitting consumers and the insurance industry millions of dollars.

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