The fear that the implementation of the Human Rights Act would end in a high profile court case has made insurers wary of continuing to use surveillance to uncover fraud. But, as Christine Seib argues, the outlook may not be so bleak after all.
Early last year the insurance industry buzzed with rumours that fraudulent claims would rise as forthcoming human rights legislation made covert surveillance a legal minefield. There were fears that insurance investigators would become obsolete, as fraudsters exploited their right to a private life and a fair trial.
The industry still remains split on the likely impact of the 1998 Human Rights Act. Some believe that instead of putting insurance investigators out of business, the act will ensure that ethical investigators will work even more efficiently while unscrupulous investigators will find themselves shunned by insurance companies. Others, however, predict that a poor understanding of the law will make insurance companies fearful of using investigators at all, making them drop fraudulent cases rather than risk being the first in the industry to be smeared in the courts and the press as a human rights abuser.
It appears that only a high-profile case which forces the courts to make a close examination of the use of surveillance in insurance claims will provide definitive answers.
The Association of British Investigators (ABI) and a myriad of other trade associations including the National Association of Fraud Investigators, the Association of Auto-Fraud Investigators and the World Association of Investigators, believe the central issue is the new risk now associated with traditional surveillance. This means that the job of investigation gets harder and that insurers need both to acquire a better understanding of the act and to look carefully at their use of preferred panels of investigators.
The Human Rights Act is not a new concept. A layman's explanation is supplied by London firm Reynolds Porter Chamberlain in a publication called Inside Human Rights: A guide to the Human Rights Act 1998. It says the UK ratified the European Convention for the Protection of Human Rights and Fundamental Freedoms in 1951. That convention was formulated by the Council of Europe to ensure World War Two's atrocities could never be repeated. It was not incorporated into UK law at the time, because it was widely believed that UK law was sufficient to protect human rights.
The courts must decide
However, that belief changed and the Human Rights Act 1998 came into force in October 2000. Articles 6 and 8 of the act are the most likely to have a bearing on the activities of insurers and investigators: the right to a fair trial and the right to respect for private and family life. Thus, if surveillance impinges on an individual's right to a private and family life, and if later used in court, it will also affect the individual's right to a fair trial. The act is aimed at public authorities, which does not include insurance companies. However, if an insurance company gathers evidence in a way that may be construed as infringing human rights, and then uses the evidence in court, it forces the court, which is a public authority, to infringe the act.
Courts must then decide if evidence gathered by insurance investigators was done in a way that infringes human rights. It must also question whether "the end justified the means".
Tony Bradshaw, of insurance investigators Kirk International, is responsible for keeping watch on legal developments that may affect his firm's work. He says: "The court must decide whether the surveillance was justified, bearing in mind the extent of any fraudulent intent." This has quickly been spotted as having a significant influence on a case's outcome. Indeed, solicitors seeking to support their client's defence against a fraud allegation are reported to be asking insurance investigators to review the work of other insurance investigators and offer an opinion of whether it was conducted in a way that infringed the act.
Chris Brogan has run Security International in Isleworth since 1978 and is the ABI's recommended expert on investigation law. He says many insurance companies turned a blind eye to dubious investigation techniques in the past. This was a dangerous approach according to Brogan. He describes the investigation industry as "60% rogues, villains and charlatans".
Few insurance companies, he adds, are making the effort to come to grips with the new law, preferring now to err on the side of caution and settle cases that they might have contested in previous years. "They don't understand the act, so they're frightened of it," Brogan says.
Andrew Chandler, an ABI-recommended insurance investigator based in Horesham, agrees that work for insurance investigators slowed when the act first became law, although he says it is now picking up again. "They're less keen because they don't know the law and they're frightened of it," he says. "No one wants to be the first insurance company to be dragged through the courts on a human rights issue." Chandler says increased public knowledge of surveillance also means that a bad investigator is more likely to be caught out, thus embarrassing their insurance company employer. "Five years ago, they could do anything in the street, but now you have to be a lot more skilful."
Conversely, RGI Investigations founder Ray Glenn, of Manchester, believes there has been an up-turn in business, although it is being enjoyed by a limited number of companies, as insurers rely more heavily on approved panels. "There is a number of core companies who are contracted to insurers," he says. "These companies are vetted and have to demonstrate a high degree of credibility. They have to be beyond reproach, have trade affiliations and have appropriate insurance. The insurance industry has realised it has to approach the people with expertise, not just the man around the corner."
Glenn, a member of the International Association of Auto-Fraud Investigators, says the Act has only stopped investigators pointing cameras into peoples' homes and interfering with their daily lives, which he maintains would not have been done by reputable investigators anyway.
Data Research Compliance managing director Chris Dewse, a 26-year veteran corporate investigator, goes one step further, saying that only a very small amount of surveillance should be necessary to successfully complete a case if the investigator is working in an intelligent manner. He says insurance companies spend huge amounts on surveillance that is often needless. Instead, Dewse's Gatwick-based company relies heavily on bespoke databases, plus industry databases from Experian and Equifax. "It comes down to serious desktop research before you start surveillance," he explains. "It comes down to knowing the claimant and, if you don't, you can only err on the side of surveillance."
However, he says insurers should review how they select the investigators that appear on their preferred panels. "There's a trend in general insurance to leave it to the purchasing department to choose the panel, instead of seeking input from experienced claims managers. If the purchasing department acts autonomously, they'll most often choose the cheapest investigator, who is also the most likely to contravene the Act."
Too little guidance
The success of one company, Croma Group, demonstrates that many insurers are still not afraid of using serious surveillance.
Croma reports a roaring trade in powerful surveillance equipment, originally manufactured for anti-terrorism forces, Customs & Excise and overseas border guards. Executive chairman John French says he only began selling the equipment outside military or government agencies last year, but already has six major insurance companies signed up to use his equipment and agents. Without promoting his services, he is attracting two or three new clients each month. Among Croma's products are long-range lenses that can read a car number plate from 5kms and see into a block of flats from 20kms. "We can equip a car with a hidden camera in the lights and audio equipment, or a 360-degree camera that looks like a mobile aerial. If there's a man in a vehicle doing nothing all day long, it's pretty obvious. If the car's empty, and doesn't look out of place, no one takes any notice," French says. He says his Hereford-based company is very aware of the act and works strictly within it.
If surveillance is still the preferred method of investigation for insurers a fear is that some companies will use less law-abiding investigators than Croma. The ABI seems to offer little guidance on the subject, with one association spokesman saying that investigators can provide a useful service but "we're fairly well-distanced from them". Surely, this means someone is riding for a fall. Perhaps that high-profile court case is not so far away after all.
Article 6 of the Convention provides:
In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.
Article 8 of the Convention provides:
Everyone has the right to respect for his private and family life, his home and his correspondence.
There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health and morals, or for the protection of the rights and freedoms of others.
Taken from Inside Human Rights: A guide to the Human Rights Act 1998 by Reynolds Porter Chamberlain.
Data Research Compliance managing director Chris Dewse argues that insurance investigators traditionally rely too heavily on surveillance, when appropriate research at the beginning of a case can ensure the need for surveillance is minimal. He offers this case as an example of what "smart investigation" can achieve:
A 38-year-old man had made a personal injury claim, including significant future loss of earnings and lifestyle, for spinal injuries sustained in a car accident, which he said forced him to stop working as a transport manager and claim full state incapacity benefits.
The claimant lived in a cul-de-sac of four houses, which made traditional surveillance easy to identify. The claimant had quickly become aware of surveillance attempts by a previous investigator, and, through his solicitor, threatened to take action against his insurance company for breach of his human rights under Article 8.
Data Records was called in by the insurance company and, instead of setting up further surveillance, they legally obtained the claimant's birth certificate. The certificate identified his parents and further research showed them as living on a farm 280 miles from the claimant.
A call was made to his parents, in which the Data Research investigator did not reveal his identity nor falsely identify himself. This is entirely legal. During the phone call, the claimant's mother informed the investigator the claimant would visit the farm at the weekend.
The investigator then camped in a forest on public land adjoining the farm. During the course of the long weekend, the claimant was covertly filmed riding horses, haymaking, ploughing and performing other farming activities that his alleged injuries should have made impossible.
The insurance company, which had set a £600,000 reserve on the case, was able to settle out of court for £110,000 soon after.