By Kevin O’Reilly
Providence-Specialized Investigative Solutions Investigator
That question weighs on every client’s mind before hiring an outside investigator. Whether the client is an attorney, a business owner or an insurance claims representative, the issue is the same: weighing the cost and time of hiring an investigator against the overall outcome.
No attorney ever wants to litigate a case on behalf of their client without knowing all the facts.
Business owners face a myriad of issues everyday:
-do I hire that person?
-I’ve hired someone and I suspect they may be acting illegally or harming my business interests
-do I bid on a job with another business that I know little or nothing about?
These are only some of the potential reasons for a business owner to hire an investigator.
For today’s discussion, however, we will focus on the insurance claim representative. Our website already lists the benefits of hiring Providence-SIS. Let’s expand on this briefly.
Q. I hired an outside investigator and I ended up making payment(s) on the claim anyway. Why did I bother?
First and foremost, this scenario is very common in the industry and should not be seen as a failure.
You and your company may find that claim is essentially meritorious (the claimant really is injured, the claimant’s house or auto damage claim is valid) but discover that you are not liable for some of the damages. Some of the many examples include:
-under the Michigan No-Fault Law, another insurance carrier or entity is responsible for all or some of the costs.
-there may be “insurable interest” questions on that property loss. Perhaps the insured is not the sole owner (or the owner at all!) or other carriers may cover some of the loss.
Perhaps one of the most overlooked aspects of investigating a claim is the potential impact on your company’s decision to continue the policy at renewal and overall underwriting.
An outside investigator has the ability to uncover numerous details that can affect your company’s future policy decisions with respect to that insured, no matter what the outcome is on the claim. We may find that there are occupants of a home, that, had your underwriting dept. known in advance, would not have written the policy in the first place or set a much higher premium. In many cases, your company may decide to rescind the policy. At the very least, your company may “non-renew” that policy even if the claim is paid.
Beyond the underwriting impact, other examples include:
We may discover that your named insured is essentially a “straw buyer” on behalf of someone with an extensive loss history including fraud. This straw buyer scenario applies as well to auto claims, including the contents portion of an auto claim.
We may find that many of the claimed items in the household could not have been involved in the loss. You may end up paying the building portion of a loss but avoid thousands of dollars in “padded” contents or additional living expenses (ALE). Many homeowner claims include fraudulent ALE expenses.
We may find that the named insured does not live at the covered address at all.
We may find that you have unlisted operators with poor driving records or previous losses.
Even if you make substantial payments on a claim, learning the many hidden details about the named insured property or hidden details of the loss will yield you many benefits. If your company belongs to NICB, you can include many of the details of the loss that will assist other carriers in fighting fraud. Names and phone numbers involved in that loss are now available for other claim professionals to see and help them evaluate any future losses.