Recognizing Red Flags in Life and Disability Claims: When SIU Involvement Matters

Author

By Jhennifer Bartz, ACLI

​Jhenniffer Bartz is the Claims Manager at SBLI, bringing 14 years of experience in life insurance claims. She specializes in the management and adjudication of complex claims, including contestable, accidental death, and foreign death cases.
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Special Investigation Units (SIU) play a critical role in life and disability insurance claims. Their purpose is not simply to investigate fraud, but to help ensure claims are handled thoroughly, fairly, and consistently.

One of the biggest challenges for claims professionals is recognizing when a file deserves additional scrutiny. Missed SIU referral opportunities can lead to improper claim payments, more complicated investigations later in the process, and inconsistent claim handling outcomes.

At the same time, not every unusual claim is fraudulent. Effective claims handling requires knowing when concerns rise to a level that justifies further investigation.

When Should a Claim Be Referred to SIU?
One of the most common misconceptions in claims handling is that fraud must be “proven” before a claim is referred to SIU. In reality, that is usually the wrong threshold.

SIU referrals are appropriate when there is a credible concern, inconsistency, or objectively supportable reason to believe fraud or material misrepresentation may exist. The goal is to begin a structured investigation early, before evidence is lost and concerns become more difficult to validate.

In life and disability insurance, referrals are typically triggered by patterns, inconsistencies, or red flags.

Red Flags in Life Insurance Claims
One of the most common referral triggers in life insurance is an early duration claim — particularly when death occurs shortly after policy issuance. These claims may raise concerns regarding undisclosed medical history, financial misrepresentation, or potential intent at the time of application.

Other common red flags include:

• Conflicting information about the cause or manner of death
• Suspicious beneficiary changes shortly before death
• Foreign death claims with difficult-to-verify documentation
• Missing or altered records
• Delayed claim reporting without reasonable explanation
• Multiple recently issued policies with high face amounts

For example, a claim involving an accidental overdose may appear straightforward initially, but inconsistencies between the death certificate, toxicology results, and medical history could justify an SIU referral for additional review.

Red Flags in Disability Insurance Claims
Disability claims present unique challenges because many involve ongoing eligibility assessments and subjective medical conditions.
Common red flags include:

• Reported restrictions that conflict with observed activities
• Sudden changes in medical severity without supporting evidence
• Inconsistent occupational duties
• Continued work activity during the claimed disability period
• Undisclosed self-employment or income
• Repetitive or boilerplate medical documentation from providers

A claimant alleging total disability while actively promoting a business online, for instance, may warrant SIU involvement to validate occupational functionality and income activity.

It is important to remember that a single red flag alone may not justify a referral. Often, it is the combination of inconsistencies and patterns that creates concern.

Why Referral Opportunities Are Sometimes Missed
Even experienced claims professionals can overlook red flags. Most missed opportunities result from operational pressures rather than lack of skill.

1. High Claim Volumes - Heavy workloads often push examiners into a checklist mindset focused on document collection and turnaround times instead of deeper claim analysis. When this happens, inconsistencies may be unintentionally overlooked.
2. Over-Reliance on Checklists - Checklists are useful for process consistency, but they should not replace investigative thinking. A claim can meet procedural requirements while still presenting suspicious circumstances that deserve further review.
3. Hesitation to Escalate - Some examiners avoid SIU referrals because they are concerned about delaying legitimate claims or appear accusatory. However, a referral is not an accusation of fraud. It is simply a request for additional investigative review when concerns exist.
4. Lack of Pattern Recognition - Red flags are not always obvious within a single file. Sometimes patterns only become apparent across multiple claims, providers, or representatives. Without strong communication between claims, underwriting, and SIU, those patterns can easily be missed.

How to Improve SIU Referral Effectiveness
Improving referral quality starts with creating a culture where investigative awareness is part of everyday claims handling.

1. Focus on the Totality of the Claim - Rather than relying on one red flag, claim professionals should evaluate the full claim narrative:

• Does the timeline make sense?
• Is the documentation consistent?
• Do medical findings align with reported limitations?
• Are there unexplained gaps or contradictions?

1. Suspicious activity is rarely identified through a single issue alone. More often, concern develops through a pattern of inconsistencies that emerge over time.
2. Encourage Early Collaboration - SIU should be viewed as a partner, not a last resort. Early consultation can help determine whether concerns justify a formal investigation and may prevent larger issues later in the claim lifecycle.
3. Strengthen Documentation Review - Careful review of applications, medical records, financial documents, and third-party reports is critical. Small discrepancies such as inconsistent dates, mismatched signatures, or conflicting occupational descriptions can become significant when viewed collectively.
4. Promote Investigative Curiosity - Strong claims professionals ask thoughtful questions and remain alert to inconsistencies without making assumptions. Investigative curiosity is one of the most effective tools for identifying potentially suspicious activity while still treating claimants fairly and respectfully.

 
SIU referrals are not about assuming fraud or treating claimants unfairly. They are about ensuring claims receive the appropriate level of review when objective concerns exist.

In today’s fast-paced claims environment, red flags are often subtle and easy to overlook. Effective claims organizations recognize that strong claims handling requires more than procedural accuracy — it requires critical thinking, pattern recognition, and sound investigative judgment.

Organizations that encourage early SIU collaboration, thorough documentation review, and investigative awareness are better positioned to identify risk early, reduce financial exposure, and maintain consistent, fair claim outcomes.

Ultimately, the strongest claims professionals are not defined solely by how quickly they process claims, but by their ability to recognize when a file deserves a closer look.