Will GPS Ruling Have Implications for Insurers?
Insurance Experts' Forum, January 25, 2012
Who would have thought that a Washington D.C. nightclub owner could tip the scales of justice toward civil liberties, and away from insurers trying to nab claims fraud perps?
This week when the Supreme Court ruled that law enforcement personnel cannot covertly place a GPS device on a suspect's car to track his movements without a warrant, you may have heard a collective shudder by insurers’ SIU teams, who are mandated—but challenged—to act within the limits of this law.
In a case dating back to 2005, the justices voted unanimously against the digital tracking of an automobile owned by one Antoine Jones, who was under suspicion of drug trafficking and had his movements tracked by police for a month. Although the resulting evidence played a key role in Jones’ ultimate conviction for distributing cocaine, the way the evidence was collected—by police who secretly installed a GPS device on his Jeep Grand Cherokee—was a no-no. A judge had overturned Jones’ conviction and the Supreme Court, unanimously, agreed.
Since there are no real statistics on how often police in the United States use GPS tracking in criminal investigations, there are probably no such figures on insurers’ SIUs that acquire warrants before covertly using GPS systems for claims fraud investigations.
And although it's illegal to monitor individuals by tagging them with GPS devices without their knowledge, there is no shortage of vendors using the Internet to market these devices to insurers. Many of these sites blatantly promote these devices as a way for insurers’ SIUs to successfully nab fraud suspects. In other words, there’s a healthy cottage industry in place and a market for these devices.
As tempting as it might sound, the fact is: Insurers can’t use the data collected from an illegally placed GPS system to bolster its case. In fact, the high court ruled this week that placement of a device on a vehicle and using it to monitor the vehicle's movements was covered by the Constitution, under Fourth Amendment protections against unreasonable searches and seizures of evidence.
Plus, there are plenty of other ways insurers can and do track the whereabouts and activities of policyholders, especially claimants being investigated for fraud. The advent of social media and the idea that close to half of all Americans own smartphones is just a start.
But aren’t we missing the point?
Earlier this week INN’s senior editor, Bill Kenealy, touched on the importance of using technologies, such as telematics, to prevent fraud, not track it.
Insurers have valid reasons to take a preventative approach. It’s estimated that 10 percent of all claims contain some element of fraud. Further, an estimated 2 percent of net premium earned is paid as fraud.
I know that insurance fraud perps will always be out there, making life difficult for decent, law-abiding carriers. But what if an insurer invested in a full-blown anti-fraud campaign that included awareness, education and training, fraud risk assessment tools, business rules, analytics, governance and a host of other preventative measures and technologies?
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