A review is being conducted by the Financial Services Authority into the use of Private Investigators by UK Insurance companies.
The regulator is concerned about the “potential for poor practice”.
There are two main areas of concern:
- the use of private investigators as a tactical tool to drive reductions in valid claim payments
- private investigators being incentivised to produce findings that reduce payments on valid claims
Operating in the above manner would be considered a breach of the rules by Insurers.
Simon Green, Head of General and Wholesale Insurance at the FSA, was looking into,
whether insurance companies have appropriate oversight when using external private investigators
Insurers use or Private Investigators stems from their concerns around fraudulent claims. We’ve written recently about the increase in number of fraudulent claims so the use of private investigators to reduce this burden isn’t a surprise.
Martin Saunders, divisional claims manager (technical) at Allianz Insurance said that they had not been approached by the FSA although he was aware that other Insurers had been. Denying that Allianz incentivised private investigators to reduce claims payments, he stressed that,
We use private investigators and the contracts and service level agreements we have in place are reviewed regularly and are part of regular audits
We’ll provide updates if we hear more about the progress of the Review.