Forensic Investigation and TCF: A Positive Partnership
Forensic investigation may not historically have been recognised as a plank in an insurance organisation’s TCF strategy. Nowadays, the forensic validation of claims is acknowledged as a tool to protect genuine customers from the impact of fraud, whilst enabling swift and appropriate claim resolution.
The intervention of forensic investigators can play a significant role in Treating Customers Fairly (TCF) by assisting insurers and loss adjusters in the crucially important aspects of:
- Affirming when cases are fortuitous, thereby equipping the insurer with the necessary knowledge and comfort to proceed with the claim in the soonest possible timescale.
- Advising when indicators of fraudulent activity have been identified; potentially leading to repudiation by the insurer and even further action.
- Identifying potential for 3rd Party recovery / subrogation.
IFIC Forensics’ fundamental role is to establish the origin and cause of the fire / explosion or escape of water and subsequently support appropriate claim resolution.
Whenever the ‘claim value potential’ has been successfully exploited by a fraudulent customer – often because the claim process has not involved the forensic eye – all other customers have arguably not been treated fairly, because someone has been falsely over-settled. And just like shoplifting, the price is ultimately paid by the policy holding public whose premiums are inflated by fraud and could be reduced by more effective fraud management.
This is why IFIC Forensics has been so active in working with insurers, loss adjusters and the Chartered Institute of Loss Adjusters [CILA] in order to encourage claims management processes which leverage forensic investigation to minimise the success of fraudulent claims, maximise 3rd party recovery opportunities and expedite legitimate claims.
However, it is more than the scientific expertise of the service that facilitates TCF benefits. The urgency of the service is also a key contributor. TCF suggests that each genuine claimant should have their claim processed, their problem solved and their home or business reinstated at the soonest possible opportunity. IFIC Forensics was the first forensic investigation firm to publicly promote a Customer Charter – a Service Level Agreement for the component elements of the delivery of forensic investigation services. For both scientific and TCF reasons, time is of the essence. It is only fair that a customer who has suffered a traumatic fire or escape of water in their home or business should expect a claim experience which is built on a bedrock of urgency.
The Enterprise Act 2016 which came into force on 4 May 2017 and gives insureds an opportunity to claim damages in the event of late payment of insurance monies due under a policy, has further focussed the industry’s attention on claim lifecycle and speed of appropriate resolution. As well as the potential compensation costs payable, the recognised risk to brand and reputation from adverse publicity in the event a customer claims under the terms of the Enterprise Act is a significant threat.
Consistency of treatment is a fundamental aspect of TCF. All claims should receive a level of forensic attention which is consistent with the type of claim, the peril, the value and the circumstances. In ‘event’ scenarios such as widespread weather-related Escape of Water claims, there is a risk of over settlement of claims and/or settlement of claims that should be declined. The media spotlight frequently turns its attention on the industry during such events with an expectation that premises should be dried out, stripped out and reinstated in unrealistic time scales, in order that displaced home and business owners can return to their properties. This pressure can inevitably lead to a proportion of cases being subject to unnecessarily increased indemnity spend. Again, this is not treating customers fairly because it is unlikely that customers are being treated equally. In this scenario, forensic investigators and their damage management colleagues can assist by working collaboratively, as a joined up team, with forensics accessing and assessing the claim site first in order to document and retrieve scientific evidence before the damage management team begin their strip out and drying out works.
To help address that situation, IFIC Forensics has urged its clients to embrace forensic expertise into the decision making pertaining to the design of claims management processes. In some cases it is apparent that a forensic assessment would add minimal value and its absence is low risk, whereas in other cases the absence of forensic attention is a significant oversight. Demonstrable inconsistency of a strategic approach to the use of forensics exposes the industry to potential public outcry. Arguably, if just one customer – by virtue of their claim experience – is treated in a manner which doesn’t apply the right level of forensic due diligence, then there is a TCF gap.
And finally, from a higher level perspective, the debate arising from the ABI’s declaration of the £650M pa cost to the industry of servicing Escape of Water claims opens up some searching TCF questions. Forensic success in fraud identification and 3rd Party recovery potential, through carefully targeted deployment under the right circumstances, could shave significant sums off that high profile indemnity spend. And if it does, the subsequent financial benefits, the profitability of the policies concerned, and the net effect that such savings could contribute to competitive pricing of premiums for the ultimate benefit of policy holding customers would not just be TCF, but proactively TCF, by dealing with the problem, not the resolution.