According to Polonius, several contributing factors appear to have pushed Hamlet over the edge, including his father's recent death, his mother's swift remarriage to the possible culprit and his love for Polonius' daughter Ophelia. At first, he attributes the majority of Hamlet's symptoms of insanity to scorned love, but later he suspects that his answer may be too simple.
When Ophelia tells her father about Hamlet's odd visit to see her, Polonius asks, "Mad for thy love?" This is one of those rhetorical questions that fathers often ask, having already come to their own conclusion on the matter.
In the next scene, Polonius visits Claudius and Gertrude, telling them, "Your noble son is mad: Mad call I it; for, to define true madness, What is't but to be nothing else but mad?" This is the beginning of a lengthy soliloquy on the matter that moves the royal couple to unease and boredom at the same time.
However, when Hamlet enters the room, Polonius sees another episode of Hamlet's insanity, this time toward both him and the king and queen. His aside says volumes about his new suspicions: "Though this be madness, yet there is method in't." While Polonius never quite puts two and two together, this quote shows that Polonius may realize that Hamlet is using insanity as a facade.