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SIU Referral

The process of routing a suspicious claim to the Special Investigations Unit for investigation of potential fraud before settlement.

industryPublished 2026/06/07Last verified 2026/06/07

FAQs

What happens to a claim when it is referred to the SIU?
Settlement is typically paused pending SIU investigation. The SIU investigator gathers evidence, interviews parties, and may coordinate with law enforcement. The investigation can result in claim denial, payment with caveats, or referral to prosecutors.
Are carriers required to report fraud to state authorities?
Yes. Most states require carriers to report suspected insurance fraud to the state insurance fraud bureau or equivalent authority when their investigation substantiates a reasonable belief of fraud. Failure to report can itself be a regulatory violation.
How does AI improve fraud detection compared to manual red flag review?
AI models analyze hundreds of attributes simultaneously, detect non-obvious network relationships between claimants, providers, and attorneys, and score claims consistently without adjuster bias. They also learn from outcome data, improving over time.

Related Terms

  • Claims Leakage

    Measurable overpayment on claims relative to the theoretically correct settlement, resulting from process failures, errors, or inadequate investigation.

  • Litigation Management

    The carrier's structured process for controlling legal defense costs, outcomes, and strategies on claims that have entered the court system.

  • Catastrophe Claims Response

    The organized deployment of adjusters, vendors, and triage protocols to manage a surge of claims following a natural disaster or large-scale loss event.

  • Case Reserving

    The process of establishing a specific dollar reserve for an individual open claim, representing the estimated total cost to resolve that claim.

Related Items

  • FRISS

    Fraud and risk detection for carriers

  • Shift Technology

    AI fraud detection layered onto claims workflows

  • Charlee.ai

    Predictive analytics for claims litigation

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An SIU referral is the formal escalation of a suspicious claim from the handling adjuster to the insurer's Special Investigations Unit (SIU) — a dedicated team of investigators trained to detect, investigate, and document insurance fraud. The referral triggers a formal fraud investigation that may delay settlement pending outcome.

How it works / Why it matters

Insurance fraud is estimated to cost the U.S. insurance industry over $80 billion annually across all lines. Carriers maintain SIU teams (or contract with external SIU vendors) to investigate claims that exhibit fraud indicators — known as "red flags." Common red flags include: inconsistent loss descriptions, claims filed shortly after policy inception, claimants with prior fraud history, suspicious injury patterns, inflated damage estimates, or unusual claimant-contractor relationships.

State regulations in most jurisdictions require carriers to have formal fraud referral procedures and to report suspected fraud to the state insurance fraud bureau. The NAIC's model anti-fraud framework establishes minimum SIU standards, including referral triggers, investigation protocols, and reporting requirements. Carriers that fail to maintain adequate fraud controls face regulatory penalties.

AI-based fraud detection has transformed SIU referral processes. Rather than relying solely on adjuster intuition or manual red flag checklists, carriers now deploy machine learning models that score each claim upon intake, identifying anomalous patterns across claim attributes, network relationships, and external data sources. Tools like FRISS and Shift Technology generate automated fraud scores that trigger referrals without requiring adjuster judgment, improving both detection rates and referral consistency.

In practice

An auto bodily injury claim involving a three-car rear-end collision in a high-fraud ZIP code, with five occupants all represented by the same attorney, all claiming soft-tissue injuries, and filed 30 days post-incident, receives a high fraud score from the carrier's AI triage tool. The system automatically generates an SIU referral. The SIU investigator pulls social media records, checks the claimants against fraud databases, interviews witnesses, and eventually identifies the accident as a staged collision. The carrier denies the claim and files a fraud report with the state.

Claims leakage studies consistently show that undetected fraud is a major leakage driver. Early SIU referral — before settlement — is far more effective than post-payment recovery efforts.

Related concepts

SIU referral overlaps with litigation management when fraud is discovered after a lawsuit has been filed. Discovery tools — including recorded statements, surveillance, and social media investigations — are used to build the fraud defense.