🇺🇸United States

Inefficient SIU Investigations Driving Excess Labor and Vendor Spend

2 verified sources

Definition

SIUs often conduct broad, non‑triaged investigations, using expensive field resources and vendors on low‑value or low‑probability cases. Without rigorous triage and clear investigation standards, carriers incur recurring overtime, outside investigation, and surveillance costs that exceed expected recoveries on many files.

Key Findings

  • Financial Impact: $100,000–$1,000,000+ per year in unnecessary investigation and vendor costs for a mid‑size carrier (inferred from industry emphasis on triage to improve SIU ROI)
  • Frequency: Daily
  • Root Cause: Absence of structured triage and pre‑investigative packages leads SIUs to open many cases that have low dollar exposure, limited evidence, or one‑off complaints.[6] Carrier SIU manuals describe detailed investigation steps and the use of outside vendors, which are resource‑intensive; without prioritization, these practices generate recurring cost overruns.[5][6]

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Insurance Carriers.

Affected Stakeholders

SIU investigators, SIU managers, Claims leadership, Procurement/vendor management, Finance/cost control

Deep Analysis (Premium)

Financial Impact

$100,000–$1,000,000+ per year in recurring overtime and surveillance • $100,000–$1,000,000+ per year in vendor costs for low-value MGA files • $100,000–$1,000,000+ per year in vendor spend on non-recoverable cases.

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Current Workarounds

Actuary compiles SIU case outcomes manually from case files; incompletes and exclusions are high; reinsurer challenges fraud reserve estimates • Actuary filters claims by partner ID; requests SIU investigation outcomes; many claims not investigated because SIU has no partner-specific triage rule; model incomplete • Actuary filters program claims and requests SIU subset; investigation sample is non-random because SIU has no program-specific triage rule; models fraud at elevated rate

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Missed and Late Identification of Fraudulent Claims Leading to Improper Paid Losses

$20–$80 per policy per year in avoidable claim costs (industry estimates that ~10% of all claim costs are fraudulent and a material portion is missed or only identified post‑payment)

Poor Investigation Quality Leading to Rework, Reopened Claims, and Adverse Outcomes

Low single‑digit percent of claim costs as avoidable leakage plus incremental defense and settlement costs on disputed SIU‑handled claims (industry‑wide, fraud and anti‑fraud failures cost billions annually)

Extended Claim Cycle Times Due to Manual and Data‑Constrained SIU Reviews

Tens of dollars per referred claim in additional loss‑adjustment expense and reserve carrying cost; at scale, millions annually for large carriers with thousands of SIU referrals

SIU Investigator Time Consumed by Low‑Value Cases and Manual Tasks

Millions per year in missed or delayed fraud savings for medium‑to‑large carriers, given that organized fraud rings can drive tens of millions in losses if not aggressively pursued

Regulatory Non‑Compliance with SIU and Anti‑Fraud Requirements Leading to Fines and Corrective Actions

$10,000–$1,000,000+ per enforcement action depending on jurisdiction, plus remediation and consulting costs (range based on typical state insurance penalty structures for statutory non‑compliance)

Systemic Insurance Fraud and Abuse Outpacing SIU Detection

Billions of dollars annually across the industry; for a single carrier, 5–10% of total claim costs are exposed to fraud risk and a portion remains undetected each year

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