Over the years, the background check of an individual and/or entity has often included a loss history to determine   whether the subject of the investigation has experience in  filing  prior  insurance claims.  This  could include prior homeowner’s losses, fire losses, prior auto accidents, workers’ comp claims, slip and  fall   accidents, to  name  only a few. Very  often, the loss history has  provided  invaluable information concerning the subject and has led to the successful resolution of a claim, fraud investigation, and/or civil lawsuit.

Due to advances in technology, the availability, reliability, and accessibility of this information has improved dramatically. In most instances, the information can be indexed/obtained “real time”, and can have a major impact on the  outcome of an investigation, compared to the past.

Over the years, I  have  seen  this   part  of  a  background investigation  evolve to  the  point  where it  is today.  The following are some examples of the sources available today, and how they have evolved to  play a major role in a large variety of investigations:

 INSURANCE CLAIMS

Several  decades  ago, the  property and casualty  insurance industry developed a centralized claims reporting system then referred to as the Central Index Bureau (CIB) for bodily injury claims, and  the Property Insurance Loss Registry (PILR) for property claims. In  addition, another reporting  system was developed for auto theft/claims, then named the National

Auto Theft Bureau (NATB).  If  that   wasn’t enough defragmentation, another system was  created and named the Insurance  Crime Prevention Institute (ICPI).  The latter two entities eventually merged  into  what  is  now known as the National Insurance Crime Bureau (NICB). Essentially, the front line adjusters and  investigators were encouraged to fill  out tedious forms and mail the claims information into the respective reporting system. Supposedly within 30 days, the  reporting party would receive a copy of any prior claim reports matching the information of the subject claimant. If no information was received, then  the reporting party would have to assume no matches could  be  found.  However, the  return matching information was very slow in coming, and many claims were resolved before  the information could be of any assistance. Consequently, many claims went  unreported due to the time required to submit the reports, await a response, and still  have enough time to utilize the information, if received. Some insurers and most self-insured companies, third party administrators, and public entities were not even subscribers to the systems, so many claims went unreported.

Then along came the computer…and a merger of the information. Now, the database is one of the most sophisticated and reliable sources of information available to the insurance industry. About 9  years ago, the CIB, PILR, and NICB claim databases were merged into one superhighway of claims information, now knows as ISO, which in now available “real time” with searching capabilities beyond comparison by any other insurance industry database. The database is now capable of providing its subscribers with a wealth of information about a subject’s loss history, including, but not limited to,  loss  dates  (going back over 10 years), name of insurer(s)/insured(s), claim/policy #’s, contact person, types ofinjuries/property  claim reported,  identifiers of the claimant, attorney (if represented), and doctor/medical provider (injury claims).

A query  system  for  qualified  SIU   subscribers  was  then developed so investigators can now search a  wide  variety  of fields either individually or in combination to assist in identifying potential   fraudulent activity  and/or fraud  indicators.

For example, the SIU query system enables the investigator to search by medical provider and attorney to determine whether the two have a history of  working  claims together on a  larger scale. Another example of a query may include checking by address only. This search will may identify aliases used by a  claimant (which can then be searched for a claims history), other family members who may  have  reported similar claims, or provide other important  information concerning the claimant’s loss history.

The value of this database to the insurance investigator is immeasurable as a tool when conducting a loss history investigation. However, the investigator must also know how to use this information in his/her investigation. The investigator must be familiar with the laws and industry protocol in obtaining the underlying claims information from the respective insurers who have reported prior loss information. For example, the investigator must be familiar with California Insurance Code 791.13, which allows the insurer to cooperate with the investigator’s written request to review and/ or obtain copies of the claim file(s), for the purpose of “detecting or preventing criminal activity, fraud, material misrepresentation, or material nondisclosure in connection with an insurance transaction”.

An investigator must also know how to analyze the information obtained so as not to form a prejudicial opinion or conclusion. For example, the fact that a claimant has several  prior “soft tissue” auto accident claims should not be interpreted by the investigator as a strong indicator of fraud.  Many other  facts would need to be developed during an investigation to make that assessment. Needless to say, forming an early conclusion based upon database information, without checking out its reliability, pattern of claim activity, motive, and other important elements is amateurish, and could be costly to the insurer, if the conclusion is inaccurate.

WORKERS’ COMPENSATION

The   Workers’ Compensation  Appeals Board (WCAB) in California, as well as a comparable Board in many other states, maintains a centralized database of litigated comp claims. Those who have established an authorization code with the WCAB can index this database. Those authorized can then go down to the local  WCAB office and request a statewide index by name/ SSN, which generally goes back at   least ten   years. The information provided will be limited to WCAB case #, injury date, and location. Access to the respective files  requires a written request, which must meet WCAB guidelines. Many workers’ comp insurers and industry   professionals may also subscribe to the EDEX system, which is an online database, containing the index information, and also enables the qualified professionals access to other information regarding work comp claims.

As mentioned  above,  the WCAB  index  only  pertains  to “litigated” claims. There are many claims that are not litigated and will not be included in this index.  However, the majority of workers’ comp insurers  are also subscribers of the centralized insurance  database  (ISO) mentioned  above. Therefore,     many “litigated” and “non-litigated” workers’ comp claims can also be located by accessing the insurance claims database.

Again, an investigator must know the respective laws concerning the use of this information.  For example, investigators must be aware that an employer cannot use  workers’ comp loss history as a basis for denying someone employment or terminating an employee.  If an employer were to conduct a workers’ comp loss history on a prospective applicant and discover a history of prior losses, the employer can only do so with written consent.

Furthermore, the   employer  cannot  deny  the      applicant employment unless an offer of employment is first made, and the employer  can establish that they cannot  accommodate the worker’s    current  injury  restrictions.  For example, if the prospective applicant has a permanent work-related injury from a previous job   that would restrict him/her from lifting over 20 pounds, and   the present job would require lifting over  20 pounds, the employer may be able  to retract  the offer   of employment.

Any decision to utilize workers’ comp loss claims history as a condition of hiring/employment should be carefully reviewed by an attorney, due to  the  very stringent State and Federal laws/ penalties surrounding hiring/employment practices.

CIVIL INDEX

A civil index on a subject may also identify other personal injury or property loss history, including auto accidents, slip and falls, altercations, construction defects, uninsured homeowner losses, to name only a few. There may be many litigated personal injury claims that were not reported to the insurance claims database for a variety of reasons. There are still a fairly significant number of personal injury cases that are not reported due to claims personnel   work  overload, oversights, laziness/apathy, non- subscribing companies, reporting errors, and uninsured losses.

For example, an  employee may  have been involved in a non work-related accident or incident, such as an altercation at a sporting event. The employee subsequently sues the alleged combatant for “assault  and battery”. This civil case  could obviously be of major significance if that same employee filed a workers’ comp claim for an alleged work-related injury shortly after the altercation, claiming similar injuries.

DRIVING RECORD

A person’s driving record may also be another source to identify auto accidents that are not identified by any of  the  above sources. A driving record will generally identify auto accidents that  were reported to the DMV when damage to property exceeds $500 (that should include about any accident in today’s dollar value). Any involved party to an accident is required by law to report an accident to the DMV as part of their “financial responsibility”. When doing  so, the  driving record lists the accident date, city where accident occurred, and occasionally a traffic  accident report # (coded).  In  many  instances,  the existence of an accident report strongly suggests that injuries were reported to  the appropriate law enforcement agency, as most non-injury   accidents  will  not   be   reported  to  law enforcement.

In non-injury cases, the reporting parties are still required to file a “financial responsibility” report with DMV, identifying their auto insurance carrier, facts of the accident, and other party involved. However, injuries could be claimed on a subsequent date.

The value of  this information  cannot  be  overlooked. For example, an employee may have been involved in a non work- related accident that was reported on his/her driving  record. Perhaps, the employee suffered injuries, but was “at fault” for the accident, so  was unable to collect from  the  other  party’s insurance company. At a result, the employee fakes an injury at work shortly thereafter, in an effort  to collect workers’ comp benefits. The driving record may be crucial in exposing this fraudulent claim scenario.

OTHER SOURCES

The sources available to the experienced investigator are only limited by their imagination. There are many other sources that a “seasoned” investigator may be able to utilize. There are other public records that may identify loss history. For example, a bankruptcy file contains a questionnaire to be completed by the debtor concerning property losses and/or  claims/lawsuits pending. There may also possibly be medical provider creditors listed who treated the  subject for prior injuries. A divorce file may  reveal  information about  the  subject’s loss  history, particularly when  locating and speaking with an ex-spouse. A police  report  index (not public record) may  also  reveal  uninsured burglaries, vandalism, injury-related incidents, and other reported crimes against a person and/or property. This source  may require an authorization or subpoena, depending upon the law enforcement agency involved or the purpose of the request.

Other valuable sources may include informants such as former/ current neighbors, landlords, former/current  employers, creditors, former insurers, to name only a few.

CONCLUSION

Conducting a loss history  may  be  one of the most important aspects of an investigation, particularly involving a claim for injuries or property loss. The loss history may frequently reveal pre-existing    injuries, pre-existing property damage, misrepresentation  of facts concerning the reported injury  or property damage, fraud, or other  mitigating  circumstances. Conducting a loss history background check can frequently result in saving a substantial amount of money, compared to the cost of conducting one. Call Specialized Investigations for a free consultation  concerning costs  and   recommendations  for conducting a loss history that best meets your particular needs.

SAMPLE LOSS HISTORY REPORT

Please contact Specialized Investigations if you would like a sample of what information is contained in a loss history report.  Please   email SI@specialpi.com< or fax to (866)782-3012, a subject  name, SSN, and/or DOB, and/or address and we will provide you with a sample report. Please include your return phone # and email address in case we have any questions about your request.

 

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