I have a passing familiarity with insurance investigations due to my work in the claims call center of a large insurance company. I’ve also voluntarily taken a series of continuing education classes through NICTA, the National Insurance Crime Training Academy, because insurance is a pretty dull industry and fraud is really interesting in comparison!
I think there are a couple different types of investigators. The internal kind (which I’m familiar with) tend to be filled by people who either worked in criminal profiling or law enforcement, or who worked their way up to it from within the insurance company. These are positions of immense trust that very likely require extensive background checking and compliance adherence. The other way to come at it is by working for a third party, like a private investigation firm. I couldn’t speak to their practices… I would imagine most are pretty aboveboard, although I’ve heard/read tales about some pretty shady PIs. YMMV, obviously! I’ll share as much as I know about what the job might entail. I hope you’ll find it useful. 
My company has an internal Special Investigations Unit, or SIU. The SIU investigates questionable claims that are referred to them by front-line claim adjusters who spot a sufficient number of red flags. Stuff that might flag a claim as questionable could be (just off the top of my head, there are lots of others):
[ul]
[li]recent coverage addition or increase in policy limits[/li][li]long criminal history[/li][li]long claims history, regardless of fault[/li][li]claimant historically involved in litigation[/li][li]recent financial trouble[/li][li]soft tissue injuries[/li][li]only treating with a chiropractor[/li][li]more than 2 adults traveling in the same vehicle[/li][li]reporting a work comp claim after being written up at work[/li][li]claiming an injury first thing Monday morning (indicates that the injury may have happened over the weekend at home)[/li][li]vehicle stolen and not recovered[/li][li]lack of receipts, no evidence of ownership for large-ticket items[/li][li]house fire or vehicle fire (nearly all fire claims get referred to the SIU, to rule out potential arson)[/li][li]late-model vehicle suddenly goes missing AND owner is underwater or behind on payments[/li][/ul]On its own, a red flag or two is not necessarily suspicious. Multiple red flags will get a claim flagged as questionable and referred to the SIU. But most questionable claims, even ones with lots of red flags, are not necessarily (or, more important, provably) fraudulent. There’s a *very high *burden of proof for insurance fraud. And most fraudulent claims are too small to be worth litigating. Even if fraud could be proven, the costs of litigation and the time investment aren’t worth it unless it’s a 6-figure claim or there is a significant PR aspect involved. They usually just deny the claim, put it in the fraud database, and move on. So a lot of the claims you’d be investigating are either legitimate or will never be litigated, and thus the work can be “small potatoes” and pretty boring.
Depending on whether you’re working for an insurance company or a private investigator, I think the job would be occasionally fun or cool. But mostly, it’s a lot of time on the phone and a lot of paperwork. Maybe you occasionally stake someone out (which is also, usually, boring). I’m just spitballing here, but the VAST majority of the SIU referrals I’ve seen are closed out because there isn’t sufficient evidence to prove fraud. In that case, whether the claim was legitimate or not, it would be paid on. Maybe 4.9% of the SIU referrals are confirmed fraudulent, and the claim is denied with nothing more than a note in the database (and their policy would likely be dropped), since there wasn’t enough at stake to warrant litigation. But every once in a while, a high-profile individual or company insured with us tries to fraudulently claim an expensive (and potentially newsworthy) incident. Those are the great cases. Obviously, I can’t disclose any details. I’ve only encountered a couple such cases since I started this job. But it’s fun for me just reading the claim notes after the fact. I’m sure those are interesting to investigate, but they’re rare exceptions.
On the whole? It’s a job like any other. If it pays decently well, I’d recommend it. But don’t go into it thinking you’ll be living like Dick Tracy (or hell, even Dirk Gently). In the 4 years I’ve been working here, I was personally responsible for the SIU referral of one claim. Since I take first notice of loss phone calls, we don’t handle claims. We’re more like data entry goons–we’re paid to be nice and to enter information accurately, not to uncover insurance fraud. But anyway, this woman pretending to be her own mother called in to report an automobile loss, so she could figure out her mother’s policy limits. During the claim, there was no indication that she wasn’t who she claimed to be. After I wrapped the claim up and told her to have a nice day, I hit my mute button and waited (call center policy is to allow the customer to hang up first). She failed to hang up and started gloating about putting one over on us to someone else in the room. I let the recording keep going, alerted the assigned adjuster the next day, and the investigator called me to follow up. Yup, that was my moment in the sun.
