Guidance now applies to PIs appointed on behalf of insurers as well as those appointed directly

The ABI has updated its guidelines on insurers’ use of private investigators to ensure they continue to reflect market practice and meet regulatory expectations.

The guidelines, first published in 2007, now apply to private investigators (PIs) appointed on behalf of an insurer as well as those appointed directly by the insurer itself.

They also require insurers to collect and review management information to demonstrate that they are using PIs in the right circumstances and only when justified.

Insurers’ use of PIs came under scrutiny in 2013 after it emerged that some insurers, among other firms, had hired PIs that had been convicted of unlawfully accessing personal data.

The FCA’s thematic review of insurers’ use of PIs in October 2013 found that insurers’ oversight of the PIs they hired was inconsistent.

The ABI said that the insurance industry supports the statutory licencing of PIs, due to come into force next year after a delay.

But it added that any regulation should be proportionate and should not apply to insurers’ in-house fraud investigation teams, which are already regulated by the FCA.

The association said it would review the guidance when the scope of the PI licensing regime is known with more certainty.

ABI fraud and financial crime manager Mark Allen said: “Insurers make no apology for doing whatever they think necessary to investigate possible fraud in the interests of their honest customers.

“But they will ensure that, at all times, private investigators act to the highest possible ethical standards, and in full compliance with the law.

“Private investigators will be used sparingly, but where they are used these revised guidelines will help ensure that insurers act beyond reproach in their appointment, supervision, and use of information they uncover.”