In an effort to streamline the application process for personal injury claims, the Department of Constitutional Affairs is proposing a fixed timescale for decisions on liability. Jason Carter outlines the hurdles the insurance industry will face and the impact this will have on fraudulent claims
As an industry, insurers have had to work extremely hard to tackle the burden of claims cost inflation and to bring down increasing fraud levels. There are now a number of government-led changes in the pipeline that look set to build on the work insurers have done - both in terms of speeding up the personal injury claims process but also addressing the disproportionately high cost of lower-value claims.
The Department of Constitutional Affairs' consultation paper Case Track Limits and the Claims Process for Personal Injury Claims, is attracting some keen interest as one of its objectives is to streamline and improve the claims process for all parties - that is, for the insurer, claimant, solicitor and, of course, the individual. This is an objective that fits well with its overriding theme of access to justice for all, but does set out some fascinating hurdles to overcome, particularly for any road traffic accident liability and fraud investigation businesses.
One of the proposals under consultation in the paper is a 15-day window for an insurer to issue a decision on liability. Critically, this follows a five-day window imposed on the claimant solicitor during which an early submission of information from solicitor to insurer must take place.
A welcome challenge
Many in the insurance industry see this as a welcomed opportunity and challenge to make that early decision with confidence and within extremely tight timescales. It also raises the question that with the proposed timescales in which to provide a credible and robust RTA investigation, new technologies and processes will need to be adopted to provide this.
This kind of movement also fits well with the Financial Services Authority's treating customers fairly drive, as the genuine claimant - and particularly those claiming for low-value injuries - can expect more transparency and faster speed of settlement than they may previously have experienced.
Nothing has been finalised to date and it is still in an extended consultation phase due to the volume of responses from interested parties. As such, there are some points that will need to be ironed out - such as defining what certain exemptions there may be and clarifying what type or depth of information insurers can expect to receive from claimant solicitors within their five-day window. But the views currently being expressed anecdotally among some in the insurance industry indicate that this 15-day window would be a positive move. There is a degree of consensus that if it is going to benefit the genuine claimant, increase transparency and reduce costs then the 15-day liability decision is to be viewed as help rather than a hindrance.
There is, however, within the consultation paper, a significant caveat to the proposal for a 15-day window for issuing a decision on liability. This is that, crucially, there will be more time and more flexibility for insurers if they suspect a claim to be fraudulent. So the idea is that claims will be fast-tracked unless the insurer has a genuine reason to believe there is a fraudulent element to the claim. So how is it possible to reach that conclusion justifiably and effectively, within those timescales?
Under such circumstances, the onus will no doubt be to refocus attention on supporting the rapid identification of suspected fraud at the earliest opportunity - so that even if an extension to the 15-day limit is permitted, the claims process will not be stalled for too long. Some insurers are already very well placed to achieve this, and certainly lead the way in these areas, but others may not be as well prepared. It may perhaps raise the question as to whether some insurers are placing enough emphasis on identifying suspected fraud at the outset of the claim process.
Empowering front-line handlers
It may even draw attention to the potential for augmentation of skill levels for front line claim handlers and whether further fraud training and provision of decision support tools is required.
Again, however, the general view seems to be that this is not a bad consequence of the paper, and indeed, if it means claimant lawyers are mandated to increase their efficiency too, then it will be of benefit to everyone.
As far as being able to support current practice in the early detection of fraud and empowering front-line handlers is concerned, the most effective method is a combination of methods. One of the systems currently in use is the Advanced Validation Solution which combines cognitive interviewing, narrative integrity analysis, intelligent scripting and voice risk analysis. It can be deployed at the first notification of loss stage as comfortably as on specialist perils.
The system is now as well recognised for its ability to fast-track genuine claimants as it is for the rapid and effective identification of risk in both claims and claim reviews. In fact, it sits well with TCF - each customer is taken through a short set of balanced and scripted questions developed, strictly in alignment with the client's existing philosophy. This ensures fair and consistent customer service on each call, which is of course recorded, therefore also providing a completely transparent and clear audit trail.
Insurers can be confident this system does not make customers feel like they are being treated unfairly. If a genuine claimant knows they will be fast-tracked through a process then they rarely take issue with the use of AVS for their claims. It is only when a risk of fraud has been identified that cases would be filtered off into a different stream, otherwise the claim can be fast-tracked.
The majority of people will be genuine and honest in their claims and the majority of fraudulent claims will probably be opportunistic exaggeration. But it is inevitable that there will always be a certain propensity for organised and premeditated fraud. It would be unrealistic to suggest that the problem is going to go away completely and may even rise if companies are encouraged to record and share more fraud data. The good news is that measures are being taken to address it - both at an industry and legislative level.
Among the widely anticipated changes is the forthcoming creation of the National Strategic Fraud Authority. This is set to come into place next year and plans to encourage and promote the recording and sharing of fraud best practice across all UK industries. It is hoped this will bring a greater awareness of the problem and scale of fraud. The insurance industry has, of course, already taken tremendous steps to achieving some of its own objectives and in turn those of the NSFA.
One of the benefits of the NSFA that will ultimately touch everyone will be that it will make anti-fraud measures more widely understood and acceptable. The steps being taken by insurers will be seen in a far wider context by the public. There is certainly a need for greater awareness and positive messaging, particularly as insurance fraud continues to be perceived in many quarters as fair game.
There is already some crossover in the way certain sectors tackle fraud. For example, Inverita has been working with the Department of Work and Pensions and local government organisations on benefit claims and reviews and has been using AVS very effectively in this area to fast-track genuine claimants.
The overriding perception from local authorities is that if AVS is seen as a deterrent to fraudsters then genuine customers will be happy because they will get access to the benefit they need more quickly. This is not a million miles away from what the DCA paper is attempting to achieve in the insurance sector.
Standards and ethics
Another forthcoming development, which could prove beneficial in the fight against fraud, is the planned licensing and regulation of investigators by the Security Industry Authority.
While some leading insurers are comfortable that standards and ethics are in place within their own organisations, many suppliers welcome the setting of standards and licensing to give their clients further confidence in the services they provide. Licensing of this initiative looks set to take place towards the end of next year.
As far as the implications of the latest Ministry of Justice Review are concerned and the industry-wide thrust to fast-track genuine customers, the main challenges for the insurance industry involve coming up with new ways to deter and detect more fraud much closer to notification.
Suppliers to the insurance industry support these principles and those behind the DCA's paper and look forward to meeting the challenges that present themselves to the industry head-on.
- Jason Carter is managing director of Inverita.
Inverita, Capita's claims and investigation services business, offers claims fast-tracking through the use of the Advanced Validation Solution system, fraud prevention, detection and investigation and recovery services across motor, liability and property lines.
Its AVS provides an instant, accurate and objective risk assessment, validating information over the phone and in real-time, fast-tracking genuine claims and reducing fraud, delivering an integrated protective gateway and counter-fraud solution to its clients.
The firm's technical expertise in the motor claims market includes road traffic accident liability and fraud investigation services using the latest innovative technologies. It continues to remain one of the largest, longest standing and successful RTA liability investigation businesses in the UK and is equipping itself to meet the demands of the latest Ministry of Justice regulation when it arrives.
Inverita's insistence on quality is reflected in the award winning University Certificate in Professional Development - Corporate Fraud Investigator course it runs from the University of Teesside, which combines excellent service with a realistic pricing structure. It aims to further develop its professional qualifications and training solution, creating a new standard in the industry for practitioner based fraud management.
Inverita has an extensive list of clients including major insurers and central and local government, to which it provides real, measurable benefits. Inverita is part of The Capita Group, the UK's leading provider of integrated professional support service solutions and a FTSE100 company.
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