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Insurers and loss adjusters to take care when investigating claims

By Jay Page, senior associate, Bowmans

If it is not already high on the agenda, becoming familiar with the requirements of the Protection of Personal Information Act (POPI Act) should be a priority.

In the UK last year, a firm of loss adjusters was found guilty of unlawfully disclosing personal data illegally obtained by senior members of its staff and by private investigators.  Sentencing took place earlier this year and fines of more than EUR 150 000 were imposed in terms of the UK Data Protection Act.  The POPI Act is largely based on its UK counterpart.

The perpetrators were found to have illegally obtained the private bank records of an individual who they were investigating. The loss adjuster, acting for an insurer, had illegally obtained the financial information in order to ascertain whether the insured had the funds to bring legal action if cover was denied.

In the course of investigating a claim, loss adjustors routinely, if it is merited, conduct a thorough investigation not only into the circumstances of the claim, but also into the insured.  The investigation, rightly or wrongly, can be particularly intensive when there is a suspicion of fraud or a suspicion that the claim has been exaggerated. According to the South African Insurance Association, fraudulent claims are estimated to account for as many as 32% of all claims submitted in any year, so there is cause to investigate.

While it is justified in certain cases to investigate further, insurers, loss adjustors and their employees must be wary of falling foul of data protection laws, as well as their duties to treat customers fairly.

One of the practices that was not sanctioned was “blagging”.  This involves calling up an organisation that holds private information and posing as an employee or as the actual individual under investigation in order to obtain private data. This would be crossing the line.  Phone “tapping” and intrusive surveillance likewise cross the line. 

Searching online social medial sites, as well as surveillance such as video recording, on the other hand, can be justified so long as there is no invasion into the individual’s private space. 

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