How to Become an Insurance Investigator

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According to the FBI, the insurance industry includes more than 7,000 companies that take in more than $7 trillion in premiums each year. It is estimated that the total cost of insurance fraud in the U.S. tops more than $40 billion each year. Insurance fraud is a widespread and pervasive problem in the United States that costs the average American family between $400 and $700 each year in premium increases.

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The coalition against insurance fraud estimates that the incidents of insurance fraud steals at least $80 billion every year from American consumers. It has also been reported that fraud occurs in about 10% of these property-casualty insurance losses which results in about $30 billion loss each year. 

It should not come as a shocker that insurance companies and businesses are aggressively pursuing insurance fraud at every level and in every industry. In fact, according to the Coalition Against Insurance Fraud, 41 states have now enacted legislation to create insurance fraud bureaus that have even more than 45,000 cases opened for investigation in 2010 alone which has evidently increased to an enormous extent by 2021. As per similar reports, the findings measure that in 2019 and 2020 property-casualty fraud would amount to $38 billion each year.

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Due to the sheer size of the insurance industry, insurance investigators are more in demand than ever. It is even reported that around $3.1 billion in false and fraudulent claims in 2020. There is absolutely no industry that is safe from insurance fraud. 

Furthermore, it was surveyed by LexisNexis back in 2016 that reported that raud schemes were of high concern for people as identity theft rose to 49 percent, hacking by 45 percent, employee-agent fraud by 37 percent and claims insurance fraud by 34 percent. Now that you understand the ardent need of insurance investigators, read further to know more about how to become an insurance investigator.

These skilled professionals, who may work in the private business sector, for insurance companies, or for state or federal insurance fraud bureaus, are responsible for uncovering evidence and information related to insurance fraud that is admissible in a court of law.

Just a few of the insurance industries where insurance investigators jobs include:

  • Health insurance
  • Homeowners insurance
  • Auto insurance
  • Life insurance
  • Workers compensation insurance
  • Unemployment insurance
  • Disability insurance
  • Property insurance

Insurance Fraud Investigations at Work

Insurance investigators are generally called in when a company, organization, or insurance company suspects fraud. These professionals may be employed by a company; they may work independently as contractors; they may be employed by a state or federal agency; or they may be employed by a private consulting firm.

The goal of an insurance investigator is to gather the evidence necessary to pursue monetary damages and/or a civil or criminal conviction.

The scope of an insurance investigator’s job is wide, as insurance fraud can come in many forms, including:

  • Submitting false insurance claims
  • Lying on insurance forms and applications
  • Exaggerating an injury or illness for monetary gain
  • Staged auto collisions, injuries, home break-ins, fires, etc.
  • Hiding pertinent information on insurance forms and applications
  • Acts of collusion

An insurance investigator typically begins a fraud investigation when an insurance company or business decides to evaluate a suspicious insurance claim or application. Oftentimes, insurance examiners and insurance adjusters, upon examination of the application or claim, report their suspicions to the company, who in turn contacts an insurance investigator to look further into the claim.

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Insurance investigators may perform surveillance, collect information from the scene, consult with experts and law enforcement officials, and check the claimant’s credit history or background to assemble relevant information. After the investigative process is complete, a report with the findings is then typically forwarded to the appropriate legal professionals, who may turn to law enforcement and seek civil and criminal charges.

Beyond the initial investigation, insurance investigators may be called upon to testify in a court hearing regarding their findings.

How do I Become an Insurance Investigator

Individuals seeking careers as insurance investigators are best served by pursuing a bachelor’s degree in criminal justice or a related program. Industry knowledge is also quite important, so individuals possessing degrees in business administration, finance, or risk management may find more professional opportunities.

Ready to become an insurance investigator? Find private investigator licensing requirements in your state.

Valuable coursework for aspiring insurance investigators should include:

  • Insurance types and options
  • Claims investigations
  • Financial risk management

Most states require insurance investigators to be licensed as a private investigator, which requires a specific set of education and experience requirements, as well as a written test in some instances.

Professional Certification for Insurance Investigators

Professional certification allows insurance investigators to show a commitment to their profession and to achieve better pay and increased mobility within the field:

The International Association of Special Investigation Units offers the Certified Insurance Fraud Investigator (CIFI) program, which is designed for individuals seeking advanced skills in detecting, investigating, and deterring insurance fraud. To qualify for this program and receive professional certification, individuals must have, at a minimum, three years of experience in insurance fraud analytics and a bachelor’s degree. 

Individuals may qualify for the program without a bachelor’s degree, provided they can show at least 10 years in the insurance industry, or 5 years in the insurance industry and 5 years of either law enforcement or military experience to receive their degree or insurance investigators certificate.

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All candidates for this program must pass an examination, which covers the following topics:

  • Insurance fraud terminology
  • Software utilization
  • Organized fraud case study
  • Medical fraud case study

The Association of Certified Fraud Examiners offers the Certified Fraud Examiner (CFE) designation, which requires a bachelor’s degree from an accredited college or university and at least two years of professional experience directly related to the detection or deterrence of fraud. Applicants must pass an exam to become certified as a CFE, which assesses individuals on the following areas:

  • Fraud prevention and deterrence
  • Financial transactions and fraud schemes
  • Law related to conducting fraud examinations in both criminal and civil law
  • Investigations related to interviewing, taking statements, and obtaining information

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