This is the fourth in a series of posts about ethical issues associated with insurance claims.
The insurance contract is an interesting example of how openness and privacy need to be balanced within a business setting. On the one hand, the insurer needs to know enough about the claim to be sure that the event was covered and that the amount being claimed for is appropriate. That can be quite a task, given the insurer knows next to nothing about the claim when it’s first reported. On the other hand, the insurer’s right to know is not unlimited, with both legal and ethical constraints influencing how they can assess, and if need be investigate, a claim. Such constraints exist to protect individuals from unnecessary invasions of their privacy.
It’s just as important that the law of privacy be upheld as it is for the law of contract to be upheld. Both sets of law are of value to us as individuals, businesses and communities, even when at times they seem to be in tension. At the same time, insurers’ rights don’t take precedence over those of the claimant, even when the cost of a claim is involved. That’s what ‘everyone is equal before the law’ means.
One crucial aspect of privacy and insurance claims is in how to interpret that aforementioned reference to ‘unnecessary’ invasions of privacy. It is absolutely right that insurers with doubts about any claims should investigate them to establish grounds upon which they can be accepted or declined. Such precautions protect the insurance buying public from unscrupulous claimants and reassure us all that valid claims will be respected.
At the same time, the law gives some protection to the privacy of all of us. We all benefit from such protection, as individuals, businesses and society overall. Despite sometimes finding that protection a barrier to what it would like to do, all insurers have an ethical duty to ensure that such rights are respected, both by their own staff and by any suppliers it may use. So for example, it is right that a claimant suspected of fraud should be investigated, but it is unethical for that claimant’s young children to be put under surveillance while walking around town. We all want our children to gain their independence without fear of being watched or followed.
I’ve previously written about five privacy issues that insurers need to take notice of (see details of free ebook below). Of those five privacy issues, the two that claims directors need to pay most attention to are surveillance (on pages 8-11 of the ebook) and identification (on pages 12-15 of the ebook).
With surveillance, the key challenge for claims directors is to ensure that providers of surveillance services adhere to clear standards of conduct. Such standards should cover all tiers of the surveillance supply chain and introduce consequences for non compliance. The need for claims departments to maintain greater control over surveillance agents was made in strong terms by the UK’s Information Commissioner in evidence to a Parliamentary enquiry last year.
With identification, the key challenge for claims directors is to only utilise information about the claim or claimant that comes with suitable provenance and measures of quality. As more and more data streams influence the underwriting of a policy, claims departments need to be able to isolate those around which reliable decisions can be made about individual claims.
Next week, I’ll conclude this series about ethical issues associated with insurance claims with a look at what is perhaps the most critical of them all: ethical culture.