Study 6: Loss investigation

Question 1

The elements of Investigation - Explain the elements of a plan of action for a loss investigation. (5)

Answer 1

• Part of any plan must consider the legal obligations of the insurer. You must provide a blank POL form to the insured early on in the process.
• Magnitude of loss is primary determinant of the scope of an investigation. The type of claim and particular circumstances will determine the plan of action. (Minor property claims are straightforward, liability claims are less clear cut.)
• Adjusters should use caution when claimants press to aggressively for a quick settlement, it can present possibility of fraud. (however, its important to not jump to conclusions)
• Adjusters may check whether insured called broker just before the loss to confirm coverage or increase coverage (may represent fraud), and if an insured just became divorced shortly before a loss, further investigation may be required, as insured may report property stolen that is in the hand of divorced spouse.
• When planning to visit the scene of the loss, adjusters must act responsibly to ensure personal safety, and must follow local health and safety laws.

Question 2

The elements of investigation - What protocols must an insurance company follow related to privacy laws? (2)

Answer 2

• They use PIPEDA, which governs the collection and use of confidential info.
• When confidential info of claimants is required (such as financial reports, medical reports, etc.), adjusters must get the claimants authorizaration for the release of any docs held by independent parties.

Question 3

What is a non waiver agreement?(4) and when is it used? (1)

Answer 3

• When coverage is in question, loss adjusters may need to preserve the legal rights of the insurer by asking the insured to sign a non waiver agreement or by sending a reservation of rights letter to them.
• A non waiver agreement informs the insured of a coverage concern.
• It mentions that an investigation to determine coverage and quantum is under way, and it includes the necessary info specific to the claim (the parties, date of loss, location, etc.), and it says that an investigation by the insurer shall not be construed as an admission of liability
• Requires the insured’s signature to give it legal effect.
• Its used when the insured is in violation of a policy condition and there is a question as to whether or not the company is liable for a loss but it wishes to investigate the loss and determine the amount of damage.

Question 4

Can a non waiver agreement be modified for different types of claims? (2)

Answer 4

• Yes, it can be modified to suit the circumstances and type of claim.
• For a liability claim, it contains an indemnity clause, which essentially means the insured agrees to reimburse the insurer for its outlay if a court confirms that no coverage exists under the policy.

Question 5

What is a reservations of rights letter? (5)

Answer 5

• If insured refuses to sign the non waiver agreement, a reservation of rights letter can be sent.
• Its an insurers notification to an insured that coverage for a claim may not apply.
• Such a notification allows an insurer to investigate (possibly defend) a claim to determine whether coverage applies without waiving its right to later deny coverage based on info revealed by the investigation.
• Must be delivered by hand (served and documented with signature), or sent via registered mail to last known address.
• Sending letter or getting insured to sign non waiver can cause friction between insured and insurer and lead to a deterioration in the relationship.

Question 6

Interview techniques - What should an adjuster do when preparing for an interview? (3)

Answer 6

• Preparing for interview with an insured, witness, or third party improves the chances that the needed info will be obtained and lessens the number of mistakes made.
• Review existing documentation to help focus on questioning. (background info from police reports, newspaper accounts, prior visit to accident scene, reports, estimates, photos, etc.)
• Prepare a checklist of what must be accomplished.

Question 7

Interview techniques - What should an adjuster do when CONDUCTING an interview? (7)

Answer 7

• Sticking to a script may not be appropriate at all times, adjusters must be flexible and use their listening skills at all times to identify gaps in information.
• Ask the right questions (See example on pg 6-7)
• Adjusters must measure the characteristics of the interviewee and accommodate the person’s style and personality.
• Avoid using prosecutorial or judgemental questions. Adjusters conduct investigative interviews, they do not interrogate.
• Sometimes adjusters questions can be misinterpreted (often questions that start with why can be misinterpreted), in that case, they should revise question to make it more easy to understand.
• When its obvious that an interviewee has made an error, the adjuster can tactfully try to show the person the extent of the error. (find an objective way to rephrase description of accident to show what really happened)
• When adjuster suspects info being conveyed is of doubtful accuracy, its not useful to challenge the person. Using good judgement and common sense are required to draw out the facts.

Question 8

Interview Techniques - When should an interview be scheduled with a claimant following a loss? (2) and where should it be scheduled? (1)

Answer 8

• Interview should be conducted ASAP after loss, as claimant has fresher memory.
• Enough time must be scheduled to properly conduct an interview. (person giving statement should not feel rushed)
• For face to face interviews, choose suitable location that minimizes interruptions.

Question 9

What are the possible question types for an interview? (5)

Answer 9

• Open - Phrasing that does not imply or suggest anything, leaves the respondent free to answer however they choose. (Tell me what happened?)
• Closed - Phrasing that requires a short answer like yes or no. (Did you lock the door when you left?)
• Leading - Phrasing that suggests a particular response. (Would you say that you were feeling distracted this evening?)
• Prosecutorial - Phrasing or tone that implies blame. (So you left the house in darkness, even though you knew there was a stranger acting suspicious nearby?)
• Judgemental - Phrasing or tone that suggest disapproval. (You felt like going out for a nice dinner in spite of that terrible news about your friends health?)

Question 10

What is a model interview approach? (10)

*Important to know for midterm/ final

Answer 10

Provides the starting point for structuring an interview:
-Adjusters generally begin interview by introducing themselves and explaining their role, this helps set interviewee at ease.

• Adjusters might start discussion with an open ended question, this encourages person to begin a narrative. Might also start with a short answer question to set interviewee at ease.
• Adjusters must listen patiently to learn about what happened from person being interviewed.
• Adjusters can ask for explanations when something is not clear or there is a gap in info. A direct or closed question can be useful for situations that need clarification as they require a very specific and short response.
• Insurance company may have general set of questions that must be asked and forms that must be filled out.

Question 11

What is a model interview approach? continued….. (10)

*Important to know for midterm/ final

Answer 11

• Too many questions at once may confuse the interviewee, adjuster needs to wait patiently until the person is ready to continue.
• When adjusters maintain composure under all circumstances, they maintain a measure of control over the encounter.
• In face to face interviews, body language should be evaluated.
• A formal written statement would not likely be needed for a modest 1st party claim without coverage issues. Adjuster can simply take notes during interview if they want to record info immediately.
• Adjuster should be ready to show notes to interviewee right after to confirm everything is correct, if the person wants to amend certain info, adjuster should ask for their initials to confirm change.

Question 12

Why is taking a statement from an insured following a loss an important part of the claims investigation? (3)

Answer 12

• They can provide a record of an accident or a claim or preserve the facts of an incident.
• May also be required as evidence in a judicial setting.
• Can be used to refresh a party’s memory at a much later date.

Question 13

Taking a statement - What is the process loss adjusters follow when taking a statement from a statement giver? (4)

Answer 13

• Before starting the statement, the loss adjuster discusses what info must be included in it.
• The loss adjuster writes the statement on behalf of the statement giver, using the statement givers own words and relating it in the first person as a narrative. (A recording of the convo can be made with permission from statement giver)
• The statement giver reviews the statement, and if required, the statement giver will make changes and initial them.
• The loss adjuster or another person present witnesses the statement.

Question 14

Interviewing witnesses - Why is interviewing a witness particularly important in a claim involving an accident? (2)

Answer 14

• Instances of two conflicting versions of an accident can be readily settled by an independent witness account.
• A statement from an impartial witness generally has more credibility than the insured or passenger in an accident vehicle.

Question 15

How can adjusters identify potential witnesses while investigating a claim involving an accident? (2) and what are the next steps when a witness has been located? (3)

Answer 15

• May canvass nearby homes and businesses or may return to the accident scene on the same day and at the same time in later weeks, hoping to find people routinely in the area who may have seen the accident.
• May also ask local businesses for copies of any footage from security cameras.
• Once a witness is located, an interview should be arranged ASAP. Its best to let the witness choose the location (their home may be most convenient for them).
• During the interview, information must be recorded that will allow anyone working on the file to locate the witness. (address, telephone number, etc.)
• Confidential info about the parties to a claim or about the claim in general must not be discussed with witness.

Question 16

What happens when a witness is unwilling to cooperate and not give the adjuster a statement? (1)

Answer 16

When a witness is unwilling to cooperate, there are no legal means by which to compel the person to provide a statement, unless the case ends up in court and the witness is subpoenaed to testify.

Question 17

What is the relationship between documentation and evidence. (1)

Answer 17

Documentation (such as formal written statements, claims file notes, reports, etc) may become evidence that is admissible by law if a case goes to trial.

Question 18

What are the three different types of evidence? (3)

Answer 18

• Oral evidence - established by interviewing a witness to obtain a description of how an accident happened. A person who makes a statement may be called to provide oral testimony during a trial.
• Physical evidence - Refers to tangible objects. (photographs of scene of accident, medical reports, etc.) Documents may also qualify as physical evidence. (books, policies, etc.)
• Secondary evidence - consists of reports from an expert presenting an opinion on the value of something or on the cause of loss.

Question 19

What is the difference between direct and circumstantial evidence. (1)

Answer 19

Direct evidence is based on witnesses own experience, circumstantial evidence can be inferred from other evidence.

*review examples page 6-14

Question 20

Collection and preservation - Why are photographs, videos and other documentations used to collect physical evidence from the scene of an accident? (5)

Answer 20

Have many purposes:

• Remind people of what an area looked like
• may enhance other physical evidence
• may record the lack of physical damage or extent of damage
• provide inexpensive way to document evidence.

-The insured may offer photographs to validate the existence of stolen or destroyed property, such photographs must be analyzed carefully to verify authenticity as they can be misleading photos.

Question 21

Collection and preservation - Describe how evidence is preserved and what steps are taken to care for this evidence. (4)

Answer 21

• Evidence should be stored in a way that limits any risk of tampering and deterioration.
• Physical evidence must be maintained in the same condition in which it was received.
• Adjusters should not write on or deface physical evidence in any way. (would not be admissible in court if case went to trial)
• Claims file must show how and when documents came to be there, and the documentation must be labelled with appropriate identification.

Question 22

What happens if evidence is destroyed intentionally? (1) Define spoliation and destructive testing. (2)

Answer 22

• The courts may impose sanctions.
• Spoliation - the destruction or alteration of evidence
• Destructive testing - when an expert hired by a loss adjuster to investigate causation intentionally destroys evidence in the process of conducting tests.

Question 23

Choosing experts - Why do loss adjusters sometimes require help from experts when conducting a loss investigation? (1) and how do they decide which experts to choose? (3)

Answer 23

• Can help insurers determine the cause of a loss or they can demonstrate who is responsible for a loss.
• They should choose experts who are reputable, stable, and properly qualified in their field.
• Some experts are chosen because they can liaise effectively with police, others are chosen because they have specific skills.
• The expert they choose should not have any interest in the claim, and they must not make any profit from the claim other than their fees or salary.

Question 24

What are the different types of experts that loss adjusters may reply on when resolving a claims issue? (11)

Answer 24

• Appraisers - estimate the cost, value, or cost of repair of an insured item.
• Property restoration contractors - expertise in repairing fire, smoke, and water damage, as well as providing reliable emergency services such as extracting water after plumbing loss.
• Suppliers - Some retailers cater to insurance claimants who had property stolen or beyond repair.
• Engineers - Involved in accident reconstruction, origin and cause determination, investigations relations to equipment failure, construction issues, etc.
• Accident reconstruction specialists - involved in traffic accident reconstruction. Recreate dynamics of collision in an attempt to determine cause of loss.
• Origin and cause specialists - causation forensics is the applied science of finding out where, how and why a fire has occurred.

Question 25

What are the different types of experts that loss adjusters may reply on when resolving a claims issue? (11) continued…

Answer 25

• Investigative specialists - help collect info about clients by doing surveillance work.
• Photographers - services may be required on large, complex claims.
• Doctors - conduct independent medical examinations (IME’s) of injured claimants and answer specific medical questions about injuries. They review the history of injury with the claimant and perform a physical examination.
• Accountants - investigate and analyze financial evidence. (financial statements, reports, etc.)
• Lawyers - insurers typically consult with lawyers who specialize in insurance work defending a claim or examining whether coverage applies on a case.

Question 26

What is a forensic expert? (1)

Answer 26

Someone connected to a court of law who can be hired by an insurer or an insured to appear in court as a witness.

Question 27

What are some sources of independent reports and how are the helpful in claims investigations? (2)

Answer 27

• Police reports, medical reports, fire service reports, an coroners reports.
• Help determine extent of damage and substantiate the claims made my a claimant