The Southern Response insurance surveillance scandal has lifted the lid on an insurance industry secret.
Private insurers from time to time hire private investigators to do secret surveillance on selected of their policyholders.
The case of Southern Response hiring a private investigator to spy on Christchurch earthquakedamaged home owner Cameron Preston is being investigated by the State Services Commission.
Prime Minister Jacinda Ardern called the Southern Response spying ‘‘totally inappropriate’’.
Inappropriate? Interesting word, but actually apt.
Sometimes insurers do think it appropriate to hire private investigators to spy on policyholders they believe are defrauding them. The aim, as shown in a 2011 Insurance and Financial Services Ombudsman case, is to find evidence someone is lying in a claim.
In that case, the insurer got Read your insurance policies Never lie to an insurer Never entirely trust one either
evidence of a man doing work tasks he was supposedly unable to do.
An insurer who catches a policyholder lying in a claim has the right to decline the claim, tear up the policy, and save itself a lot of money.
This can lead to people becoming uninsurable.
In a 2007 case one insurer hired a private investigator to watch someone who had been on a longterm medical claim, but had come off. The man had not begun a new claim, nor intended to, but his insurer had learnt of a relapse of his depression.
I asked life insurer Fidelity Life when it would hire a PI to surveil a policyholder.
It would only do it in ‘‘extreme’’ cases, it said. Secret surveillance had to be approved by a panel of senior executives, and only in cases where it was ‘‘fair and reasonable’’.
I had a chat to a PI to find out what they were allowed to do. They can’t make secret voice recordings of conversations they aren’t a party to. They can however watch a person’s house, and spy on them in public places, and places to which the public has access. This may be done by using remote video cameras (usually in vans). They may film, or take pictures of people in private gardens, if they can be seen from a public space. There was a grey area on whether tracking devices could be planted on people’s vehicles.
Insurers often hire investigators to look into claims, and interview claimants.
This can be intimidating, and gruelling, though at least it is upfront and in the open, unlike the secret surveillance.
Anyone wanting to know how stressful being interviewed, sometimes repeatedly, by a private investigator is, should read the Australian Guilty Until Proven Innocent report by the Financial Rights Legal Centre.
It said people with legitimate claims could be intimidated into withdrawing them, and called for more transparency. Insurers should commit to a code of conduct around the use of investigators, it said.
Consumer affairs minister Kris Faafoi is doing a long overdue review of insurance.
He should be aware of this issue, and know that while the police need a warrant to spy on a person, insurers do not. And while a person does not have to answer police questions, insurance policies require policyholders to cooperate with insurers at claims time.
Private eyes can spy on you, thought the law limits the methods.