Authors: Doris Amedior, Frank Fiadufe & Muntawakilu Amadu
Affiliation: Prima Due Diligence Consult
Private investigation is a process where trained individuals who are not law enforcement officers gather facts to uncover the truth and also help individuals or organizations to make informed decisions. Private detectives and investigators search for information on behalf of corporate organizations and private individuals at a fee. They may work on a range of cases, collecting financial, personal or legal information by conducting interviews, doing background checks, and conducting surveillance.
Insurance on the other hand is where a company decides to bear the liability of a loss (specified loss, damage, illness, or death) and guarantees to reinstate an individual or organization to its former position where applicable for an agreed premium. Private investigators (PIs) are frequently commissioned to assist in claims investigation in order to ensure the claims are genuine and within coverage.
Individuals or organizations often employ the services of a private investigator instead of fully relying on government security and law enforcement agencies because public agencies usually have an overwhelming number of cases and backlogs, hence would not be able to prioritize and quickly attend to cases as a private investigation firm would do.
The Need for Private Investigations in Insurance Claim Process
Insurance is not for gain, however, in an effort to profit at the expense of other policyholders, a number of people might engage in fraudulent activities. There are several reasons why someone might commit insurance fraud.
Some individuals may do it as a result of their financial difficulties. It’s possible that some people don’t realize they’re breaking the law and mistakenly believe their actions are okay. A limited number of persons might carry out this activity more methodically and intentionally.
Insurance fraud is a serious issue that costs insurance companies billions of dollars annually, therefore, it is the duty of insurance companies to exercise due care in paying claims to ensure they are paying legitimate claims. Insurance fraud has an impact on both insurance providers and customers. The Coalition Against Insurance Fraud estimates that insurance fraud costs the insurance sector $308.6 billion annually in the United States. This includes fraudulent claims for property damage, personal injury, workers’ compensation, auto theft and healthcare.
Personal injury claims arising from automobile accidents are the most prevalent in the US. Each year, car accidents cause injury to millions of Americans. Individuals may claim to have been injured in an accident to receive compensation for medical bills, lost wages, pain and suffering. PIs can investigate the extent of the injury, whether it was actually caused by the accident, and whether the individual is truly unable to work as a result. PIs may also investigate claims related to property damage, such as car accidents, fire or theft.
An insurance company might use the evidence and information gathered by PIs to assess the veracity of a claim and decide how to proceed. To look into claims, PIs employ a range of techniques, such as incident summaries, claimant interviews and statements, document evidence, tangible evidence, witness statements, and case reports.
By outsourcing investigations to private investigators, insurance companies can speed up their claim process on genuine claims saving time and meeting timely expectations of their clients. Also, well-investigated claims assist insurance companies in making unbiased decisions concerning claims.
Insurance claim process in Ghana and the role of PIs
When an insured (claimant) wants to file for a claim in Ghana, they must fill out the claim form and attach the required document (police reports, fire reports and medical among other reports where applicable). These documents are verified by the insurer’s in-house claims department.
Loss adjusters are engaged in the event of property loss or damage to assess the extent of damage and estimate the cost of repairs or replacements. When the insurer is satisfied with the information provided by the claimant, a discharge voucher is issued followed by a payout.
One of the reasons the issue of fraud is prevalent in Ghana is due to over-reliance on documentation provided by the claimant without adequate due diligence. Many insurers depend heavily on submitted documents which can be falsified.
In 2021, Ghana’s Insurance Commissioner, Dr. Justice Ofori, stated that 25% of all insurance claims filed in the nation were false. He advised that insurance providers in Ghana must improve their due diligence to guarantee that only valid claims are compensated. Due to this, the majority of insurance companies routinely hire private investigators to assist with claims investigation.
Private Investigators leverage their expertise to dig deep and combat fraudulent insurance claims. PIs in their quest to confirm a claim’s validity follow up on reports submitted by claimants from various institutions like the police, fire service, and hospital among many others.
Unlike Law Enforcement Agencies (LEAs), PIs have more flexibility in their approaches and usually do not have to go through any serious bureaucratic process in order to execute an action, this makes the services of PIs more desirable, especially in time-sensitive cases.
PIs act as neutral parties to gather intelligence from insurance claimants to validate the genuineness of their claims or refute them. A lot of private investigation firms are well-versed and equipped with modern digital tools and techniques for investigation, PIs sometimes utilize Open-Source Intelligence (OSINT) to investigate claims by gathering information and data available online to verify the legitimacy of claims.
Case Study
In Ghana, there was a case where a third-party injury claimant filed a claim for permanent disability due to a car accident. While the police report confirmed the accident and a medical report supported the disability, the insurer hired a PI due to the amount involved and the suspicious behaviour of the claimant. Through surveillance, it was discovered that the claimant had the ability to push a loaded wheelbarrow and carry heavy items on both feet. These findings indicated that the claimant was not permanently disabled but intended to take advantage of the car accident to defraud the insurer. The claim was denied and this saved the insurance company a payout of over GH₵300,000. PIs generally put in a lot of time and effort to conduct surveillance if and when required to obtain irrefutable evidence to support or debunk a claim.
Conclusion
To determine the validity of a claim, insurance firms frequently conduct investigations. The claims adjuster’s decision-making process is informed by the results of the investigation process. This makes the work of private investigators beneficial and effective. It is always better to ensure you clear all reasonable doubts regarding claims before settlement to ensure that, people are not gaining unduly. Also, one small fraud ignored can birth bigger fraud costing the company millions in the long run.
Recommendations
It is recommended that insurance companies use the services of private investigators to save time and allow for effective and efficient claims processes.
Insurance companies should seek out more training and education for their staff to keep them aware and abreast with telltale signs of fraudulent insurance claims.
Also, further research and studies should be done to evaluate the effectiveness of private investigations in curbing insurance fraud.
Disclaimer
The opinions expressed in this article are solely those of the authors and do not necessarily represent the views of their past or current affiliations. The opinions were derived from personal experiences, expertise, and subject knowledge.
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