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How to Become a Claims Adjuster & Fraud Investigator

Claims adjuster inspects a damaged car.

Becoming a claim adjuster and fraud investigator offers an attractive salary and job security. But what exactly do these professionals do? And how can you become one? Let’s take a closer look at this popular career path.

What Is A Claims Adjuster and Fraud Investigator?

Claims Adjuster

An insurance claims adjuster investigates insurance claims to determine a company’s liability coverage. These professionals assess liability or the number of damages insurance companies owe. Depending on where they work, they are sometimes called “claim examiners” or “claim representatives.” Overall, their main goal is to ensure the insurance company pays out the correct amount of money on a claim.

Fraud Investigator

Fraud investigators are responsible for investigating allegations of fraudulent behavior by claimants or employees of an insurance company. This behavior may include falsifying information on an insurance application, staging car accidents, or billing for treatments that never took place.

Fraud investigators typically work for federal, state, or local government agencies or private businesses.

Both Claim Adjusters & Fraud Investigators

The fraud investigators and claims adjusters speak with claimants, witnesses, and physicians (in the case of medical insurance). They do this to determine whether a claim is valid. In addition to investigating fraudulent activity, they also work with claimants who have legitimate reasons for submitting a claim. Claims adjusters and fraud examiners may need to meet with lawyers, police officers, or other professionals to help them uncover any evidence relevant to a claim.

What Do Claims Adjusters and Fraud Investigators Do?

The responsibilities of claims adjusters and fraud investigators may vary depending on the company they work for. However, some core tasks are common to both professions.

Essential Job Duties of a Claim Adjuster

  • Investigate, Evaluate, and Settle Insurance Claims

When an insured person or property experiences a loss, a claims adjuster is assigned to determine compensation value. In this role, they inspect the damaged property and interview witnesses before deciding how much money will be paid out by the insurance company. Claims adjusters also determine whether or not the policy covers a claim and if it requires compensation. This process usually involves a lot of research and negotiation with claimants.

  • Determine Whether the Policy Covers the Loss Incurred

After an incident occurs, it is essential to determine whether the policy covers the loss incurred. The insurance company will likely have a claims adjuster to help with this process. The claims adjuster will review estimates from the complaint to determine whether they are reasonable, necessary, and customary based on the policy. If approved, the insurance company will send a check to the insured for the amount of the loss minus any applicable deductible.

  • Decide the Amount Payable to Claimant

Claims adjusters are responsible for determining the amount of money an insurance company should pay for a claim. Adjusters look at the policy, state law, and other factors to determine the payable amount.

In some cases, adjusters may need to investigate whether a claimant is lying or committing insurance fraud. This work can be difficult, but it’s crucial for both parties involved.

  • Negotiate Settlements and Authorize Payments

Adjusters are also responsible for negotiating settlements and authorizing payments. The adjuster may need to go before a judge to get a settlement approved in some cases. Therefore, it is essential to have excellent communication and negotiation skills. Adjusters often need to explain the claims process in layman’s terms; hence, they clearly describe complicated concepts and procedures. They also need to understand insurance policies inside and out to help resolve disputes between policyholders and insurers.

Essential Job Duties of a Fraud Investigator

  • Conduct Investigations on Fraudulent Claims

Fraud investigators are responsible for handling the most serious types of fraud cases. These typically involve multi-million-dollar policies and high-profile policyholders such as celebrities, athletes, politicians, business executives, etc. They are an essential part of the insurance company because they help determine if a claim is fraudulent or not.

  • Review Evidence to Analyze a Claim’s Fact Pattern

Another important role for insurance fraud investigators is to review evidence related to a claim and analyze it. After receiving an incident’s first report, investigators will gather records of the events before, during, and after the accident. They may look at police reports or statements from witnesses. Investigators may also review photographs taken by surveyors or surveillance cameras in the area where the event occurred.

They will also look at medical records to determine the extent of any injuries and insurance policies and other documents related to the claim. By reviewing all this evidence, investigators can develop a fact pattern to help them determine if a fraudulent scheme is taking place.

  • Find Relevant Evidence by Visiting the Site of Incidence

It is crucial to find as much relevant evidence as possible when investigating insurance fraud. Therefore, a fraud investigator may visit the incident scene if possible. They will take photos and measurements to show how big the fire was. Fraud investigators need to see the scene soon after it happens because evidence can change or disappear over time.

How to Become a Claims Adjuster and Fraud Investigator

There are several necessary steps to become a claims adjuster and fraud investigator. The most crucial step is to have the proper education and experience.

Here is how to become a claims adjuster and fraud investigator:

  1. Earn Your Degree
  2. Become Licensed
  3. Get Certified
  4. Gain Experience

1. Earn Your Degree

The education and degree path for claims adjusters is pretty straightforward but not set in stone. Some states require that anyone who becomes a claims adjuster attend an insurance training school or pass the state licensing exam.

Associate’s Degree in Fraud Examination

An associate’s degree in fraud examination is an excellent way to start your career as a claims adjuster or fraud investigator. It will give you in-depth knowledge of the field and open up some jobs for you. Many colleges offer this program at both campuses and online classes. You also have an option to earn credits towards your Bachelor’s degree through this program. One online option is the Associate of Science in Investigation & Security from South College.

Bachelor’s Degrees for Claims Adjusters & Fraud Investigators

No specific degrees are required to become a claims adjuster or fraud investigator. However, many employers prefer candidates with a bachelor’s degree in one of the following areas:

Students who want to become insurance fraud investigators may earn a bachelor’s degree in criminal justice, emphasizing crime scene investigation. Criminology of business or accounting is also an important area of study if they prefer working more hands-on with forensic evidence than reviewing financial documents. Students will learn to investigate crimes, collect evidence and write research papers based on their findings during investigations.

Master’s Degree for Claims Adjusters & Fraud Investigators

A master’s degree in business, insurance, law, or a related field may give you an edge when pursuing a career as a claims adjuster and fraud investigator. A graduate degree can also lead to advancement opportunities within the industry.

Valuable Types of Degrees for Claims Adjusters and Fraud Investigators

Selecting a major that will advance your career is vital when choosing what to get your degree in. Some majors that can be beneficial for those who want to pursue careers as claims adjusters or fraud investigators are:

  • Insurance Risk Management Degree

This major is a crucial degree for claims adjusters and fraud investigators. Students in this degree program will learn about risk management and inspect, analyze, control, and manage risks. They will study various subjects, including insurance companies’ operations, financial statements analysis, investment strategies, and alternative risk financing techniques. Utica University’s MBA in Insurance & Risk Management is one of several fully-online options.

IRM degree graduates can become Insurance Underwriters or Claims Adjustment Managers as they have strong knowledge of these subjects.

  • Criminal Justice Degree

A criminal justice degree will give you the knowledge and skills needed for these careers. Students will learn about crime scene investigation, law enforcement, and corrections. They will also gain experience in critical thinking and problem-solving. These skills are essential for investigating insurance fraud cases.

  • Accounting and Finance Degree

A degree in accounting and finance will give you the skills needed to work as a claims adjuster. You will learn about financial statement analysis, business law, and risk management. This degree will also teach you how to manage money and insurance claims. Therefore, it is essential when it comes to working with insurance companies. These degrees can also lead to related fields, such as forensic accounting.

  • Law Enforcement Degree

A law enforcement degree is necessary for working as a fraud investigator. You will learn about criminal investigation, constitutional law, and terrorism. This degree will also give you the skills needed to work in law enforcement. As a result, it’s crucial to investigate insurance fraud cases.

  • Public Administration or Social Work Degrees

Some colleges and universities offer undergraduate or graduate degrees in public administration or social work. While these degrees may not be specific to claims adjusting and fraud investigation, they can provide you with a strong foundation in the field of criminal justice.

2. Become Licensed

All states require claims adjusters and fraud investigators to be licensed. The licensing process requires passing an exam. Be sure to check with your state’s insurance regulator for specific requirements.

A claims adjuster or fraud investigator can obtain many different types of licenses. The most common is the Property and Casualty Adjuster license. But there are also licenses for Life and Health, Workers’ Compensation, and General Liability.

The best way to find out which license is suitable for you is to contact your state insurance regulator. They will tell you what exams you need to pass and provide other information about the licensing process.

3. Get Certified

After a license, certification is the subsequent essential documentation claims investigators should pursue. While it might not be mandatory, certification verifies an investigator’s skill set and knowledge in the industry. Obtaining certification from a reputable organization, such as The National Association of Insurance Commissioners (NAIC), is vital to distinguish your resume and set you apart from other applicants.

Claims investigators need to have a bachelor’s degree and at least three years of experience in the insurance fraud industry to qualify for these certificates. Those without a bachelor’s degree need to have a minimum of 10 years of experience to be eligible for the CIFI certificate.

Certifications for Claims Adjusters and Fraud Investigators

Various professional organizations offer certifications and special designations for claims adjusters and fraud investigators. Many insurance companies require their employees to become certified claims adjusters or fraud investigators. However, this depends on the nature of their jobs. Earning a certification isn’t required by any state laws to work as a claims adjuster or fraud investigator.

Nonetheless, the following are some special certifications capable of improving a candidate’s credibility in this field:

  • Certified Insurance Fraud Investigator (CIFI)

The CIFI is open to individuals with a minimum of three years’ full-time investigative experience in the insurance industry or five years’ full-time investigative expertise in any field. Candidates for this certification must pass an exam and pay a fee for the certificate. A CIFI designation is suitable for three years, after which holders must complete continuing education courses to maintain the credentials.

  • Certified Fraud Examiner (CFE)

The CFE is available under the Association of Certified Fraud Examiners (ACFE). It’s a certificate tailor-made for aspiring claims adjusters and fraud investigators. To take the CFE, you must have a minimum of two years of experience investigating or detecting fraud and pass an examination covering four topics:

  • Financial transactions
  • Law
  • Investigation
  • Fraud prevention and deterrence

The ACFE offers courses on-site and online to help prepare for the CFE exam.

  • Certified Information Security Manager (CISM)

Information security is a critical part of the claims adjuster and fraud investigator profession. To protect your clients’ data, you need to be certified as an information security manager. The CISM certification is a globally recognized certificate. It proves you have the skills to manage and oversee an organization’s information security program.

To earn your CISM certification, you must pass a rigorous exam that covers five domains:

  • Information security governance
  • Information risk management
  • Incident response and crisis management
  • Security program development and management
  • Information security operations

The CISM certification is valid for three years, and you must recertify every three years to maintain your credential. Recertifying requires completing 20 Continuing Professional Education (CPE) hours and passing the recertification exam.

  • Certified Insurance Fraud Analyst (CIFA)

The CIFA is a certification program that offers experienced insurance fraud professionals the opportunity to demonstrate their knowledge, experience, and expertise. The program covers a wide range of topics related to insurance fraud, from investigation techniques to claims handling. The CIFA designation shows that you have the knowledge and skills needed to investigate insurance fraud and protect your company’s bottom line.

  • Certified Management Accountant

To become a certified management accountant (CMA), you will need the following:

  • A degree in accounting or finance from an accredited university
  • Complete the CMA exam and adhere to the CMA
  • Code of ethics

The CMA certificate ensures candidates can handle finances and make critical decisions. As an insurance investigator, you will be required to make crucial financial decisions. Therefore, the CMA credential could be advantageous to your career.

4. Gain Experience

To become a successful claims adjuster and fraud investigator, you need to have experience in the field. You can gain this experience by taking on internships during your studies or finding a job in the industry after graduation. By gaining hands-on experience, you will learn how to investigate claims and identify fraudulent behavior. Additionally, you will develop relationships with fellow professionals who can provide valuable networking opportunities.

Average Salary for Claims Adjusters and Fraud Investigators

The Bureau of Labor Statistics (BLS) reports the median annual wage for claims adjusters, examiners, and investigators was $68,270 as of May 2020.

The median salary is when half of all employees in an occupation earned more than that sum, while the other half earned less. The lowest 10% made less than $41,950, and the highest 10% made more than $103,610.

Therefore, this shows that claims adjusters and fraud investigators have a relatively high salary compared to other pensions.

Can You Advance as a Claims Adjuster and Fraud Investigator?

Yes. As a claims adjuster and fraud investigator, you can advance to other positions in the insurance field, such as risk manager or underwriter. You could take on supervisory roles as an assistant supervisor of adjusters or move into management as a claims manager.

Other opportunities include becoming an independent consultant after gaining sufficient experience and establishing yourself within the industry.
To advance in this field, the following is necessary:

  • A degree in insurance, risk management, business administration, or a related field.
  • Experience as an adjuster, investigator, or both.
  • Licensure in some states.

Each state has different requirements for licensure. Therefore, be sure to check with your state’s insurance department before pursuing this path.

Work Environment for Claims Adjusters and Fraud Investigators

Claims adjusters, examiners, and investigators had about 333,800 employment opportunities in 2020.

Claims adjusters and examiners work in offices when reviewing documents and conducting research. They work outside when examining the damaged property. Adjusters and investigators inspect wrecked cars and structures and conduct surveillance. Much of the time, vehicle damage appraisers spend at automobile body shops evaluating vehicle repair expenses.

Fraud investigators usually have either a government or private sector job. They work in offices, often conducting interviews and reviewing documents. Some fraud investigators travel to meet with people who have made allegations of wrongdoing.

Work Schedules for Claims Adjusters and Fraud Investigators

Most claims adjusters, examiners, and investigators work full-time. They often work long hours to meet deadlines. Some may also be expected to work evenings or weekends if they conduct surveillance or serve legal papers during those times.

Examiners and investigators working for the government often have a standard work schedule. They may receive benefits that include paid vacation, sick leave, and health insurance.

Pros & Cons For Claims Adjusters and Fraud Investigators

Pros

  • Helping people in their time of need
  • Working with a team to investigate insurance claims
  • Getting to know the legal system and insurance laws
  • Gaining experience in the legal system and insurance industry
  • Working with other professionals such as lawyers, accountants, police officers, etc. to investigate frauds

Cons

  • Long hours and working weekends and holidays
  • The stress of investigating claims and dealing with the public
  • Having to testify in court cases

Critical Skills for Claims Adjusters and Fraud Investigators

Beyond education, insurance investigators require some skills to produce better results in their field. The primary skills for claims adjusters and fraud investigators include:

Investigation Skills

An investigative mind is essential for claims adjusters and fraud investigators. To be successful, you need to develop core skills that will help you in your career. These include:

  • Interrogation
  • Interviewing victims and witnesses
  • Studying medical records of the injured party (or other relevant documents) to look for inconsistencies in their claim
  • Analyzing police reports, photos taken at the scene, accident data information, and interviews with law enforcement officers or paramedics involved in the case
  • Performing background checks on the claimants involved in a case and any other relevant parties
  • Looking for inconsistencies between witness accounts, official reports, photos taken at the scene of an accident or crime, and the claimant’s story
  • Cross-examining all witnesses in court proceedings

Developing these skills will help to investigate potential insurance fraud and make decisions that protect the interests of your company.

Negotiation Skills

Adjusting claims often involves negotiating with different parties involved in the case (i.e., claimants, attorneys). Adjusters need strong negotiation skills to agree on compensation for damages or injuries. Fraud investigators also need to negotiate with potential fraudsters to get them to confess their crimes.

Communication & Listening Skills

Insurance investigators write reports, memos, and other documents that clients or senior management read. They must be clear, concise, and accurate to communicate information regarding the claims they investigate effectively. Good written communication also helps insurance investigators in one of the primary responsibilities: writing claim reports.

A claims adjuster must have excellent listening skills. They need to understand what the policyholder is saying and the insurance company’s point of view. They also need to interpret complex information and ask the right questions. In addition, a good claims adjuster will listen for potential fraud. They can detect when someone may be trying to commit insurance fraud by listening carefully to their tone of voice.

Critical Thinking, Analytical, & Decision Making Skills

In addition to an investigative mind, critical thinking is also a valuable skill to have as an insurance fraud investigator. It’s essential to look at all sides of the situation and assess whether something is fraudulent or not. Claims investigators can do this by breaking down the incident step-by-step and looking at each piece to see if it makes sense. Often, insurance fraud is not as clear-cut as it may seem. Therefore, good critical thinking skills are essential to determine whether something is fraudulent or not.

As a claims adjuster and fraud investigator, your conclusions matter and can impact the outcome of a claim. Therefore, it’s only reasonable to develop good decision-making skills. Your decisions have to be thorough and a result of critical thinking. The ability to make sound decisions quickly is also a valuable skill.

Fraud investigators must analyze data quickly and accurately to identify potential fraud schemes. They also need to review medical records and other documents to determine whether or not a claim is fraudulent. Adjusters who work for insurance companies must also have strong analytical skills to assess liability and damages in claims.

Organization, Adaptability, & Time-Management

Every employer expects a claims investigator to produce organized and comprehensive reports. These reports include details, evidence, and potential frauds. Adjusters working in the private sector are often required to handle multiple cases simultaneously. Good time-management skills help adjusters work efficiently and prioritize important tasks to meet deadlines.

The ability to adapt is vital in the insurance industry. Claims adjusters and fraud investigators must quickly change their approach based on the situation. Similarly, fraud investigators may need to change their approach with each new case. They must adapt their investigation process based on what they uncover during their work.

Take the Next Step

Becoming a claims adjuster and fraud investigator is not a one-size-fits-all process. Depending on your state and area of specialty, there will likely be different requirements you’ll need to meet. Take the first step to pursuing this exciting career and GetEducated today!

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