Study 4: Risk and Governance - Summary (Part 1) Flashcards
Four characterstics of proof when dealing with insurance fraud evidence
- Reasoning and convincing are human thought processes and therefore prone to subjectivity. Not everyone gauges proof adequacy the same (this is why juries are used).
- The pursuit of establishing proof should always be towards irrefutability. It is not just about weighing what is known but also ensuring there is nothing left that hasn’t been fully explored.
- The consideration and reasoning behind the establishment of proof must always be defensible. This means the people who determine proof adequacy—enough or not enough proof—can be called upon at any time to articulate their reasoning. A computer-generated conclusion or output cannot be considered proof.
- Statements that are relied on as proof must be recorded during an investigation. Potential disputes and credibility issues over whether something was said or how it was said are almost always avoidable.
Standard of proof
- The amount of evidence and level of certainty needed to prove an allegation
- With insurance fraud, different circumstances may require different standards of proof
The four standards of proof applicable to insurance fraud (from highest to lowest)
- No doubt
- Beyond a reasonable doubt
- Clear and convincing evidence
- Balance of probabilities
No doubt
(Standard of proof)
Happens in cases where a person admits responsibility, and the admission is corroborated by other evidence. Difficult but not impossible to achieve this standard.
Beyond a reasonable doubt
(Standard of proof)
Used by criminal and quasi-criminal proceedings in most countries. Burden rests upon the person making the allegation. Defining characteristics:
- Used where there is a higher consequence at stake, including the possibility of going to jail.
- Requires a very high level of satisfaction that proof has been established by evidence and facts (not suspicion)
- The only plausible explanation or conclusion is that the person is responsible for, or guilty of, the allegation. No other explanation or conclusion is plausible.
- Requires the removal of every reasonable doubt. If there is the slightest doubt, the benefit of the doubt goes to the person who is alleged to be responsible.
- The standard is based on the evidence as an entire package. It is not a standard composed of isolated pieces.
Clear and convincing evidence
(Standard of proof)
- Evidence and facts must be highly and substantially probable to be true
- Requires a high degree of believability, person considering evidence must have firm belief in factuality
Balance of probabilities
(Standard of proof)
Typically used for civil proceedings, administrative law, and diciplinary law. Important elements:
- Balance of probabilities refers to whether it is more probable than not that an allegation is true (ex. facts presented show at least 51% that allegation is true)
- This standard of proof is lower than beyond a reasonable doubt, but the seriousness of the allegation may be higher. For the person who is the subject of the allegation, the allegation is viewed to be extraordinarily invasive and accusatory, so there is a strong onus on the person initiating the allegation to justify it.
- The burden of proof rests completely on the person making the allegation or initiating the proceedings, who must present stronger evidence than the defendant and demonstrate it is more probable to be true.
Best practice standard of proof for insurance cases
- Allegations of fraud or corruption include risk of reputational damage for the person believed to be responsible
- This risk is combined with unfavourable societal views of insurance companies
- Therefore, it should be counterbalanced by a high standard of proof in insurance fraud and corruption cases
Three additional principles to help insurers establish standards of proof when making decisions regarding fraud
- Someone is “innocent until proven guilty” (or “innocent unless proven guilty” to emphasize a high standard of proof)
- It’s better that ten people get away with insurance fraud than one person be wrongfully accused of insurance fraud
- The burden of proof is always on the accuser
Issues around privacy (fraud prevention)
- When intelligence is created by gathering and using personal information to be used by technology to block unwanted new business or to sever existing business
- When the insurer will not do business with a supplier because the supplier has been prohibited from providing goods due to previous fraudulent acts
Issues around privacy (fraud detection)
When a person’s information is collected and used to feed data models in fraud prediction technology
Issues around privacy (fraud investigation)
- When information from investigations is disclosed to other organizations that are conducting investigations into similar allegations against the same people or entities
- When surveillance of people is conducted during investigations
Issues around privacy (fraud deterrence)
- When information collected during an investigation is disclosed to initiate an enforcement complaint
- When actions or outcomes from complaints made to enforcement bodies are publicized
Three foundational privacy rights
- The right to freedom to choose to be left alone without interference or intrusion
- The right to protection from unreasonable collection, disclosure, or retention of personal information
- The right to be free from damaging publicity or public attention
Seven privacy principles and practices for insurance fraud management
- Fraud management program should document baseline practices relating to privacy
- All privacy laws must be obeyed
- Surveillance should only be considered in cases determined to be potential fraud, not fraud risk
- Personal information should not be used for future fraud management if the case was never analyzed or investigated
- IP addresses are personal information
- Personal information should not be disclosed if the case was determined not to be fraud
- Credit ratings should never be used to determine potential fraud
