Mar 15, 2013 2 min read

12 questions an insurer needs to ask about their use of private investigators

The news that the FSA is conducting a review into insurers’ use of private investigation firms should come as no surprise. With an influencial committee of the UK Parliament calling for the licencing of those handling information obtained through private investigators, and the UK’s information watchdog citing “aggressive and inappropriate surveillance techniques used by investigators working for insurance companies” as one of its main sources of complaint, you can easily imagine the FSA adding it to their ‘to-do-list’ for 2013.

So to help an insurer make a quick assessment of how well they’ve been managing their use of private investigators, I’ve put together this checklist of questions.

  1. Does your contract with private investigators set out clear standards of conduct under which investigations are to be carried out?
  2. Can the claims director point to at least one personal communication sent to all claims staff in the last 12 months in which he/she made clear that under no circumstances should they accept information from private investigators that has unclear provenance or any indication of having been illegally obtained?
  3. Have your claims staff dealing with private investigators received any training in privacy issues in the last 12 months?
  4. Have your claims staff been briefed in the last 6 months about what are acceptable and unacceptable practices in the investigation of claims?
  5. Does your contract place responsibility for the conduct of sub-contracted investigators upon the primary investigator?
  6. Does your contract with private investigators make clear that the means by which the information provided has been obtained (and who obtained it) must be clearly documented and that any information of unclear provenance will be rejected?
  7. Can the full provenance of information received from a private investigator be entered onto your claims management system? By full provenance, I mean details of all primary and subcontracted investigators and the way in which they collected that information.
  8. Does your contract with private investigators make clear that information obtained by means that are in any way illegal will result in the termination of their contract?
  9. Has your internal audit team carried out a review in the last 24 months into the information your claims teams has been receiving from investigators?
  10. Has your firm undertaken due diligence checks of investigating firms’ controls and standards in the last 24 months?
  11. Does your contract with private investigators include any form of provision that links their remuneration with any form of claims cost reduction or invalid claims decision?
  12. Does the performance management of claims staff (from director downwards) contain any form of incentive to reduce the number or cost of fraudulent claims?
Duncan Minty
Duncan Minty
Duncan has been researching and writing about ethics in insurance for over 20 years. As a Chartered Insurance Practitioner, he combines market knowledge with a strong and independent radar on ethics.
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