Commentary: Strategies to Keep SIU Focus on Point

By Jose Pagan, managing partner at Kelley Kronenberg | March 17, 2015

Like a prize fighter waiting for the opportunity to land the right punch, Special Investigative Units (SIU) investigate questionable cases with the goal of shutting down a fraudulent claim or scheme. Such focus can lead to a concentration of effort which may sometimes be counter-productive. In some instances we become so focused on landing “the knockout punch” that we overlook other effective strategies in dealing with questionable claims – which either would have led to an earlier successful resolution or allow other issues to go unnoticed.

The one thing we can always count on in our business environment is change. With technology, that change seems to come at quicker intervals. Knowing that change is inevitable allows us to anticipate and adapt to inherent variations more easily. It allows both individuals and organizations to be less myopic; to see the larger picture even while focused on a particular goal. The key to maintaining that focus while allowing a broader perspective includes conducting thorough evaluations regularly.

We all strive to perform our best, but recognize that no individual person or system is perfect. No matter how strong or thorough, all systems and individuals suffer from inherent weaknesses. Identifying, understanding, and correcting those weaknesses while improving core strengths should be the goal in developing any system or professional. The only way to continue to improve is to implement a regular process of evaluation and implement changes where necessary.

Adapting to change is critical in that both fraudulent schemes and technologies to perpetrate these schemes are evolving over time. It behooves us to learn the tried and true methods for investigating and combating fraud, but not to become so complacent that we fail to recognize other potential areas of concern. To what extent is there effective internal communication within your Claims Department? In a healthy environment, there will be an exchange of ideas and information between your Claims and SIU staff. Generally, it will be the Claims staff that first identifies emerging issues, as more advanced or clever schemes to defraud are developed.

Also, make certain that your organization regularly reviews your SIU Plan. While required to be updated at least once a year, is the review merely dusting off the cobwebs and making sure the authorized personnel lists are accurate, or is there a mechanism for determining when more substantive changes are desired or necessary? Sometimes an external audit is preferable, since stakeholders who take pride in improvements made over time may not recognize deficiencies as a result of focusing on the strengths of the system.

Depending on the organization, there may be a single-minded purpose or multiple issues to address in the evaluation of your internal controls. These issues impact not only the organizational structure but the corporation’s overall effectiveness as well. A greater focus on one line of business or type of insurance doesn’t always relate to better results or more effective fraud prevention. Sometimes a more diversified organization is better suited to identifying new potential sources of fraud and weaknesses in the system than a highly-concentrated organization, since different divisions can provide greater overall perspective. Further, some companies may be excellent at identifying and pursuing a particular threat to their core business, but less adept at recognizing other potential risks.

For instance, the past few years has seen an explosion in the amount of fraud relating to technological issues. How is your organization handling this aspect of the potential fraud equation? Is there communication between your Claims and IT Departments to address possible issues? There should be frank discussions between the Claims and IT Departments about possible weaknesses and the safeguarding of sensitive or personal information. A potential breach could have repercussions beyond just the loss of goodwill and costs to remediate, but may also impair or disrupt the company’s operations in the near term.

Many times, discussions about IT and data security focus on the internal data maintained by Underwriting and Personnel divisions. Think about what could happen if your internal data is compromised by hackers. Besides the information about your customers and employees, how will claims be affected? How can an SIU investigation be affected? Consideration should be given to this topic as attacks become more common and insidious. As the recent Anthem case illustrates, hackers have moved on from retailers and banks and appear to be targeting insurance carriers as well. We must continue to adapt to these emerging threats to ensure both compliance and effectiveness in the future.

Keeping that in mind, when was the last time your organization conducted a thorough audit of the Claims and SIU Departments? We all could benefit from strategic planning, however many of us are so busy that we fail to take the time or provide the necessary resources. Challenge yourself and your organization to perform a thorough review which results in meaningful analysis and adapt were necessary. The costs may seem unnecessary, unless you become the target and the one to suffer “the knockout punch”. A little planning and constant monitoring will be the only way to keep championing your company’s success.

Jose Pagan is the managing partner of Kelley Kronenberg’s Tallahassee Office, focusing his practice on Insurance Defense and Regulatory matters. He can be reached at (850) 577-1301 or

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