COVID-19 Impact on Insurance Claims & Fraud Investigations
June 22, 2020
In response to the COVID-19 pandemic, the insurance and investigative industries quickly responded to stay-at-home orders, increasing unemployment and social distancing requirements. While some of the impacts have been temporary, some will last beyond the immediate threat of the virus. From the perspective of a provider of field investigative services here is what our clients have reported:
- Insurers, third party administrators and insureds transitioned to home-based workers. This transition caused a temporary shift in focus to infrastructure and reorganizing work routines. Engagement between claims staff and investigators was reduced due to the transition to remote work
- There continues to be confusion about stay-at-home orders, re-opening guidelines and how those impact insurance claims and fraud investigations, particularly those that require the deployment of field resources
- Market pressures and reduced claim counts have created the need to contain costs. Non-essential employers suspended hiring and reduced staff during the stay-at-home orders. Expanded unemployment benefits offered the unemployed alternatives to filing claims as a source of income. As benefit subsidies decrease in July, the market is anticipating an increase in insurance claims as a means of creating income for those that remain unemployed
- Despite the increase in the unemployed, essential businesses such as grocers, distribution centers, delivery companies and construction and maintenance companies have been increasing staff
Claims professionals have experienced new challenges in processing and investigating insurance claims amid the COVID-19 pandemic.
- Some insurance administrators do not have the ability for claim professionals to record telephone calls when working remotely
- Social distancing requirements inhibited compensability investigations requiring recorded statements from third party claimant, insured and witnesses
- COVID-19 claim procedures, legislation, emergency regulations and case law are still developing
The above challenges have also impacted the perceived value of insurance claims and fraud investigations during our response to the pandemic. Claims professionals have expressed concerns directly impacting their antifraud and claims investigation efforts:
- Social distancing is perceived to have negated the intelligence gathering aspect of activity checks, specifically related to injured workers activity levels
- Stay-at-home orders and subsequent personal concerns over exposure to the virus could limit the activity levels and thus relevance of surveillance in determining the nature and extent of injured workers’ activities and level of disability
- Medical and legal appointments were cancelled or rescheduled limiting the comparative value of evidence gathered during background investigations or surveillance
While some investigative companies chose to suspend services either due to concerns about the virus, a misunderstanding of their status as an essential business, or simply due to a lack of demand, the COVID-19 pandemic was viewed by some investigative companies as an impetus for developing, refining or educating claims professionals on alternative investigative techniques and strategies.
- Investigators have been assisting with three-point contacts, recorded statements, and providing recording solutions to home-based claim professionals
- Investigators have been utilizing recorded video conferencing to obtain recorded statements of third-party claimants, insureds, and witnesses. Leveraging video conferencing technology has allowed investigators to validate the identity of witnesses, develop rapport, respond to non-verbal cues, and adhere to social distancing requirements while eliminating investigative costs associated with travel
- Recorded, video wellness checks provide comparative data such as the progression of treatment, symptoms limitations and the claimed impact of an injury on daily living activities
- Investigative companies have been attending COVID-19 specific training related to claims and human resources issues. In collaboration with claim professionals new interview guidelines have been developed to address issues related to COVID-19 exposure, positive diagnosis, stress, and bodily injury claims related to home-based work environments
- During the COVID-19 response, investigators have reported an increase in social media and online activity from those with open insurance claims. Desktop investigations provide much of the same intelligence as a traditional activity check or neighborhood canvass while eliminating travel related expenses and personal contact
- Fraud and abuse continue to occur and often increases in times of crisis. Despite stay-at-home orders, surveillance investigators have observed an increase in injured worker activity, such as non-essential activities that exceed stated limitations and employment with essential businesses while collecting benefits. Some investigators have reported that subject activity levels have increased as much as 5% when compared to pre-COVID-19 statistics. Some investigative companies have suspended neighborhood canvassing operations to limit direct contact between field investigators and members of the public, shifting to gathering information via desktop or telephonic investigative efforts
Now that the county is starting to re-open, claims professionals are facing several new concerns requiring an investigative response:
- COVID-19 industrial injury claims are starting to escalate
- The workers compensation insurance industry is anticipating an increase in cumulative trauma claims among furloughed and laid off employees following the expiration of expanded unemployment benefits
- Injured workers and others with bodily injury claims predating COVID-19 may extend temporary disability benefits due to furloughs and postponed treatment
- Treating physicians may be sympathetic toward unemployed claimants and injured workers increasing the likelihood of temporary disability benefits being extended
The emerging concerns and impact of COVID-19 on insurance claims and related investigations require claim professionals to rely on investigative partners who can adapt to the new social environment, leverage technology, and mitigate costs associated with insurance claims and claim investigations.
- Investigative providers will need to have specific expertise in addressing issues unique to cumulative trauma claims and emerging COVID-19 regulations and case law
- Investigators will need to implement new solutions to investigate malingering and identify red flags such as remote recorded statements, enhanced desktop investigations and updated surveillance procedures
- Evidence may need to be presented to treating physicians through remote, web-based video and evidence reviews to highlight discrepancies between claimed limitations and the nature and extent of actual claimant activity.
COVID-19 has caused a temporary and potentially a permanent shift in our industry. However, as with all times of crisis, it has also spawned renewed energy, creativity, and an invigorated entrepreneurial spirit in response to our changing environment. Insurance claim and fraud investigations remain relevant and provide value to insurance claims professionals who rely on investigators to provide them with information that allows them to make educated claims decisions.