Issues Facing SIU Departments

By Denise Johnson | May 16, 2012

Financial validation of special investigation units (SIU) doesn’t often come into play when companies analyze their worth, according to panelists in a discussion on emerging issues in SIU.

The discussion, held during the recent Insurance Fraud Management Conference in Phoenix, Ariz., discussed several issues SIU departments will face in coming months.

Craig V. Pusser, SIU supervisor for AAA NCNU Insurance, said his company doesn’t track return on investment (ROI) on an individual case level. Instead, his company looks at impact versus ROI.

Progressive Insurance Special Investigations Process Leader Jeff Moore agreed.

“We don’t track it,” he said.

Sentry Insurance SIU Director John D. Kloc said there isn’t a lot of emphasis from upper management on financial validation, though the company does track numbers for state compliance.

Current and Future Challenges to SIU

According to Moore, the future challenge to SIU will continue to be the prioritization of resources.

“The job has evolved a lot,” Moore said.

SIU managers have increasingly borne more responsibilities, Pusser added. Although the primary focus remains on claims, SIU’s now have added involvement with product, underwriting and training.

According to Douglas L. Ashbridge, Farmer’s director of special investigations, keeping one’s own department up to date in order to articulate trends to other departments is increasingly difficult.

“It’s becoming more of a challenge now than it has been in the past,” said Ashbridge.

Pusser thinks employees haves become too focused on process and considers it a major issue that needs to be addressed.

“It’s a huge challenge to us to get through to folks handling claims in that manner,” he said. “What they do impacts a claim dramatically.”

Ashbridge pointed out another challenge is having a centralized SIU department handling all lines of business. That’s because each line of business has its nuances and fraud tactics vary.

Kloc said that because Sentry is a smaller company, the adjusters and investigators must be generalists handling auto, transportation, cargo thefts and workers’ compensation claims and investigations.

“It’s a challenge if you’re a smaller company and you don’t have a big unit,” said Kloc, whose company developed webinars for an internal training program to address the challenge.

Staffing Issues

In the future, companies can expect to see more modelers, statisticians, nurse investigators and data analysts working within SIU, according to the panelists.

While some companies expect to expand jobs for those with specialized expertise, others see automation as a way to handle SIU’s expanding role.

“Going forward, we expect to generate more referrals from automated systems than direct referrals from our adjusters,” Pusser said.

In addition, AAA NCNU plans to expand the claims triage role to screen out false positives to get appropriate files out to field personnel.

Though SIUs have long focused on high severity claims, it may be time for a change, Moore said. For example, while glass claims are low severity with a high frequency, the costs for fraudulent activity could easily add up, the Progressive SIU process leader said.

Social Media

The use of social media as a tool during claims investigations continues to be a hot topic.

According to Kloc, Sentry involved legal counsel to assist in evaluating the pros and cons of using social media in investigations. The company decided to give all adjusters permission on a case-by-case basis after meeting with a supervisor and explaining the necessity.

Progressive adjusters have access to social media with strict guidelines in place, Moore said.

Because of the extra work, there was no real upswing in referrals, a panelist said.

In an unexpected twist, the panelists noted that claimants and insureds are increasingly attempting to locate or friend adjusters on Facebook. There have been instances where claimants and attorneys have sent tow receipts to adjusters’ personal social media accounts.

Mergers and Acquisitions

The panelists touched upon the effects of mergers and acquisitions on SIU departments. While Moore hasn’t ever been through a merger and acquisition in his 21 years in the industry, Ashbridge has gone through three of them and said that there is always a job concern.

Ashbridge said there are multiple concerns when companies merge: the use of multiple claim systems, differing SIU structures, even the strong chance that executive management’s opinion might change. He recommended adjusters and investigators be prepared, indicating that it is an opportunity for process and talent selection.

Change can be a scary thing; however, it’s not always detrimental to a company. Because it’s a time of review, the panelists said they see it as a way to bring out the best within the companies involved.

“The end outcome can be a better product than any of the merged companies had to begin with,” said Ashbridge.

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