Reservation of Rights: Harsh Consequences for Getting it Wrong

Reservations of Rights

In an industry that is built on standardization of policy forms, the reservation of rights letter is anything but standardized. This lack of set guidelines means that there are countless reasons why a reservation of rights letters can be found to be deficient. Courts have been penalizing insurers for issuing what they see as an inadequate reservation of rights letter, with the resulting huge potential loss of otherwise applicable coverage defenses.

According to an article in the December 2015 issue of Claims Magazine, the most common – yet easiest to prevent – reason for the deficiency is that the explanation provided to the insured of why coverage may not be owed for some claims or damages was not sufficiently specific. For example, a reservations of rights letter that sets forth a brief factual summary of the claim, followed by several pages of (sometimes irrelevant) policy language, and a concluding statement that the insurer reserves its rights. Mainly, it did not “fairly inform” the insured why, despite a defense being provided, coverage for any damages may not be owed.

The best way to approach drafting a reservation of rights letter is to remember its purpose. It needs to make it abundantly clear to the insured that, just because the insurer is defending, it should not get a false sense of security when it comes to coverage for any damages. In other words, fairly inform the insured. The way to achieve this is by including a thorough and clear explanation in the letter of why coverage may not be owed. Matsen Insurance can help you navigate through the complex ends and outs of your coverages, contact us today.

Front Lines of Cyber Risk: What’s a Company’s Best Defense?

Data Breaches

Data breaches and other cyber-related exposures are steadily on the rise, despite heightened security measures implemented by companies and government agencies around the world.

According to an article in the December issue of Claims Magazine, the Identity Theft Resource Center (ITRC) has recorded more than 620 data breaches in the United States so far this year, resulting in 176 million records being exposed. Three of the largest data breaches on record have occurred in 2015, including to healthcare provider Anthem, social website AshleyMadison.com, and the federal Office of Personnel Management.

The tangible and intangible costs associated with this kind of breach can be rather significant and affect a business’ ability to survive in the long term. The 2015 NetDiligence Cyber Claims study estimated that the average cyber-related insurance claim amounted to almost $700K.

As technology continues to advance at an astonishing rate, cyber threats to companies are expected to increase exponentially. In order to best prepare for such an eventuality, a company’s management team should consider the different possible cyber-related exposures:

  • As businesses become more automated and dependent on computers, software, and the Internet to manage their industrial control systems, managers of critical infrastructure operations need to consider and evaluate the potential impact that a cyber attack could have.
  • A company must assess its financial status and ability to survive should a breach occur, and ultimately decide whether to secure cyber insurance.
  • Even with excellent cybersecurity measures and dedicated IT resources 100 percent prevention is impossible. Working to mitigate the losses after a cyber incident may be a prudent course of action.
  • If a data breach is discovered, a company may have to comply with multiple federal and state privacy laws that require private or government agencies to notify potentially affected individuals. Companies should make sure to ensure adequate insurance coverage to help pay for breach-related expenses.

Most companies stand to benefit when they prepare a cyber strategy before a claim occurs by doing the following:

  • Identifying what assets need to be protected.
  • Establishing a plan of action and identifying measures to help protect these assets.
  • Leveraging the services of a skilled service provider—a breach coach (typically an external legal counselor) or a data breach resolution service.
  • Developing and distributing a cyber emergency response plan, as well as training all employees and turning the response plan into a protocol.

Being prepared for a cyber incident goes beyond developing a cyber strategy. It should also include consideration of a Cyber insurance policy as a risk management transfer mechanism. An all-encompassing Cyber insurance policy generally provides first- and third-party type coverages designed to address data breach exposures, including: security breach expenses, actual loss of business income, public relations expenses to restore a firm’s reputation, the cost to replace or restore electronic data and devices, and other forms of liability that may arise following a data breach.

When it comes to arming itself against the threat of a cyber-attack, companies that develop and implement a cyber security strategy before an incident has occurred are in a much better position to respond and survive. Matsen Insurance can supply all of your cyber security insurance risk management needs, contact us today.

Cases That Changed the Industry

Insurance Industry

The insurance industry is changing on a regular basis, but none so much as the changes that were witnessed in 2015. With insurance offered online, the Affordable Care Act and a variety of new policies that have been enacted it’s hard to correctly predict the decisions of the Supreme Court regarding the rules and regulations that insurance companies must follow going forward. In five different cases this past year the Supreme Court ruled in ways that are helping to shape and mold the industry, but also turn it on its head.

Texas Dept. of Housing and Community Affairs vs Inclusive Communities Project, Inc. – these case raised concerns regarding fair housing for minority low income homeowners and the credits given to those who build these homes.

King vs Burwell – In this case the millions of Americans that used Healthcare.gov to sign up for health insurance were at risk of losing their tax subsidies; the result was retention of these benefits for those who used this site.

Fluor Corp vs Superior Court – The finding in this case was that an anti-assignment clause on a liability policy does not bar the coverage for post loss.

Hartford Casualty Insurance Co. vs J.R. Marketing LLC – The decision in this case was in regards to whether or not an insurance company can sue for direct fees from an independent counsel, which it was found they can do.

Travelers Property Casualty Co. of America et al. vs Federal Recovery Services – The decision in this case was made that Travelers did not have to defend Federal Recovery when they willfully withheld data due to a fitness company changing to a new data storage services company.

You need a risk management specialist to help you maneuver through many of these legal minefields. In most cases we can tailor insurance coverages to manage your risk.

For more information, call Matsen CEO, R. Glenn Matsen, directly on his personal extension at 415.692.3464 ext. 103.

Proactive Moves to Limit Risk and Liability

Insurance Claim

As insurer’s process claims from their represented businesses, the reports and information therein are generally taken at face value, even if the circumstances are frustrating to the insurer. Sometimes a pattern emerges, of easily-solvable problems on the part of the insured that could prevent accidents and the need for some claims to be filed in the first place. With some simple preventative action, businesses can proactively reduce their risk of accidents on their premises and thus save themselves the time and money involved in making an insurance claim later. It’s important that the insurance industry emphasize this more frequently, since proactive thinking ahead is an easy fix that many large businesses nevertheless neglect to consider.

Most businesses carry loss and liability insurance, and of course theoretically want to do what they can to keep their customers and employees safe and to avoid having to make an insurance claim. A business’s legal duty is to use reasonable care to maintain the business premises in a safe condition: but what is “reasonable care”? How the business defines that can make a big difference in the number of claims filed against a business, and, should a claim be filed, help determine whether or not the business is to ultimately be found to be at fault.

One everyday example given in last month’s issue of Claims Magazine is that of a stray hanger lying on the floor, half-hidden under a rack of clothing. Such a small simple thing, easy to pick up and thus remove the hazard, and yet this is a prime example of a not-infrequent liability claim against retailers: a customer slips and falls and sustains an injury on the store premises, allegedly due to a clothing hanger lying on the floor.  If retail management emphasizes proactive care to their employees on the floor, such potential hazards will be much more quickly identified and can be corrected while an employee goes about other duties.

The point is not to station one person to constantly watch for issues, but to encourage all employees to keep an eye out for potential problems while taking care of their regular tasks. Management should regularly follow up with employees at all levels to ensure that all understand their role in preventing accidents before they happen. Proper action should always be taken when a problem is spotted: be it an easily picked up stray hanger or something more involved, such as a loose floor tile or a leaky puddle of water on the floor. It’s impossible to prevent all problems, but if everyone is watching out and proactively taking care of things as they occur, this can go a long way towards helping reduce or eliminate accidents and liability.

Adjusters and risk managers should ensure that they are emphasizing this key point with their clients for better solutions all around. At Matsen Insurance, we make sure our clients are well-informed on their options to reduce liability. For more information, contact Matsen CEO, R. Glenn Matsen, directly on his personal extension at 415.692.3464 ext. 103.

“Arising out of” Means What?

Arising Out Of

Arising out of” has been a term disputed by courts across the country to try and come to a conclusion regarding its meaning. This term has been called both ambiguous and unambiguous, which easily shows you the confusion present when it comes to court filings and legal documents. This term is used many times in insurance documents to describe a situation where the insurance would cover the incident, making it seem fairly clear in regards to its meaning, but without a specific definition of the term when a claim makes it to court both sides tend to argue the meaning of the term in some way.

The term “arising out of” is fairly simple to explain; let me give it a try. When you have homeowner’s insurance that covers injuries to parties that are present in your home this term may be in place stating “except when arising out of actions pursuant to a business operating at the residence”. What this means is the insurance would cover injuries to parties at your home, unless the injury is a result of your running a business from your home such as a daycare center. This is important for you to understand so you know what protections you need.

In order to make sure you have the protection you need in your home, at work or in your vehicle you need to clearly understand the meaning of “arising out of” to make the best use of your insurance. For more information, call Matsen CEO, R. Glenn Matsen, directly on his personal extension at 415.692.3464 ext. 103.

And the Verdict is…..Family Claimed Defective Heater Started Fatal Fire

Property Insurance

In the early part of Jan 5, 2011 a fire started at the Shinedling home which eventually caused the loss of the mother of three young girls due to a faulty space heater. When you purchase a space heater you expect it to work properly and be safe while providing heat for you throughout the night, but in this case the result was an absolute nightmare for both the family and the manufacturer of the heater.

With the case in court, in front of a jury, the fault was split 80/20 with the manufacturer taking the brunt of the responsibility. This verdict came back with an award of $58,650,000 for the family which after apportionment the total awarded is $46,920,000. While this is a substantial award it does not replace the mother of the three girls and the wife of a devoted husband.

What do we learn from this? The first thing to do when purchasing a space heater or any other product, especially one that can possibly cause fire or be an ignitor of any kind is to follow the warnings of the manufacturer. It’s also a great idea to make sure you read reviews for products to ensure you can take advantage of the experience of others. Make sure the product chosen has proved to be reliable in its performance. The last thing you want to do is fight in court after having lost a spouse or child. If you are a manufacturer, you need to make sure you have high enough product liability limits to protect your potential losses, Matsen can help you in obtaining the higher product liability limits.

For more information, call Matsen CEO, R. Glenn Matsen, directly on his personal extension at 415.692.3464 ext. 103.

5 Practical Property Recovery Tips

Property Recovery

After a significant property loss—whether for personal or commercial use—there is a desire by both the insured and the carrier to settle the claim in a quick manner for various reasons: the insured wants a return to normalcy, and the carrier wishes to provide the utmost in customer service while controlling costs like additional living expenses and/or possible losses incurred by business interruption.

The question of subrogation then arises, which in a large property loss case can pose unique challenges when it comes to a successful recovery. With regards to a claim made from a recovery perspective, getting involved early in the process to gather and protect critical information and evidence is crucial.
According to the November 2015 issue of Claims Magazine, the following five basic practices can aid an insurer in securing more of their paid claims funds:

  • Conduct or direct field scene investigations with an eye towards subrogation. The field adjuster can ask pertinent questions and document third-party potential to help back up the subrogation claim.
  • Make sure to preserve the evidence. It is up to the insurance professional to alert the policyholders of the importance of retaining evidence to be tested and providing them with a reason for cooperating if there is any hope of recovering their deductible. An even better alternative is having the field or independent adjuster collect the evidence at the scene, especially with losses that occurred from a faulty product.
  • Hire the right company/expert to conduct the examination of the faulty product. Extremely careful attention must be paid to the handling of the product to avoid allegations of destruction or tampering. Ideally, the evidence is examined simultaneously by the expert for the insurer and the manufacturer, which saves time and money.
  • Secure a cause and origin expert to establish a solid subrogation case. Strong consideration for this type of referral should be given to electrical fires, appliance fires, and spontaneous ignition incidents with the aim of establishing and confirming third party negligence and/or product failure.
  • Aim to identify potential subrogation on cases before any payment has been made. Determining cause and origin and proving negligence should start as early as possible. Develop an in-house program or consider subrogation vendors (provided by FNOL services) that use sophisticated methods of data extraction and optical character recognition which enable them to start the investigation before the claim is paid by the carrier.

On complex claims especially, savvy property adjusters recognize the importance of identifying subrogation possibilities early on in the claims process, before the scene has been compromised and important clues as to the cause and origin still remain intact, resulting in success for all parties involved.

The Cartel Connection: Linking Insurance Fraud, Drug Cartels and Terrorism

Insurance fraud is a $400 billion dollar industry in the United States—second only to narcotics trafficking. Without a doubt, the two are often linked. According to the November issue of Claims Magazine, the Coalition Against Insurance Fraud reports a dramatic increase in organized transnational crime rings involving drug cartels, terrorists, cyber thieves, and mob syndicates using insurance fraud as a way to fund their illegal activities.

Most syndicates often base their operations in third-world nations rife with broken laws and corrupt officials. But even in developed countries insurance fraud provides a relatively easy, low risk, and highly profitable means by which international drug cartels and terrorist organizations can make money to fund other unscrupulous enterprises.

Let’s look at the basic process in which scams and laundering funds are pulled off in a post 9/11 world:

Criminal enterprises require significant funds to create and maintain their infrastructure. One example of fraud involves rings of associates who perpetrate staged vehicle accidents. The occupants who feign injury are paid a small sum for their cooperation, while the capper—the person who orchestrates the whole scenario—gets a larger sum and the unscrupulous attorney can retain what is left over. Some or all of these funds may be used to pull off more sinister operations involving narcotics, terrorism or both.

There is a growing body of evidence that terrorism can also be included in the connection between drugs and insurance fraud. Terrorist activities require funding, not only for weaponry, but also for training, travel, and living expenses. For that reason there have been many steps taken at the federal level to combat fraud through the enactment and modification of laws and rules, such as the USA PATRIOT ACT and the Border Security and Visa Entry Reform Act, which deal with crimes such as money laundering, identity theft, credit card fraud, immigration fraud, illegal use of intellectual property, and tax evasion.

Soft fraud—involving legitimate claims that are exaggerated, such as personal injury claims—cost insurers an estimated $4.8 billion to 6.8 billion annually. This often includes inflated medical bills, charges for services not rendered, and deceptive billing practices—claims that can be very difficult to identify and even harder to prosecute. The expenses incurred by organized insurance fraud rings trickle into the public domain, as premiums go up, embedded taxes on goods and services are added due to rising costs associated with merchant fraud, and consumers are forced to pay hidden litigation taxes for the cost of frivolous litigation.

As insurance fraud continues to rise, it is vital that there be a collective effort between the insurance industry, consumer groups, elected officials, and federal, state, and local law enforcement to bring about meaningful and effective change to stem this global problem. Contact Matsen Business Insurance for all of your insurance needs.

Freeze Frame: 3-D Laser Scanning Captures the Picture

3-D Laser ScanningPreservation of evidence and accurate documentation is a vital component of any forensic investigation, and with the increase in complex risks being underwritten, the techniques used by property adjusters, damage appraisers, and forensic engineers must adapt to the insurance market’s present needs. According to the latest issue of Claims Magazine, the use of three-dimensional 3-D laser scanning is a crucial tool that allows adjusters and investigators to not only document the scope of the damage digitally and in real time, but provide important data to be used for future risk assessments.

In its simplest form, a 3-D laser scanner can generate three-dimensional copies to millimeter accuracy of complex objects and environments. So what are the benefits of using this method?

  • It can take millions of measurements in minutes, which potentially results in reduced time (and cost) than it would have using traditional methods.
  • It makes for remarkably accurate data. The ability to digitally document a scene soon after an accident is extremely valuable, especially when a business needs to resume online transactions to avoid increasing business interruption claims.
  • The use of a laser scanner to capture an accident scene from a distance greatly enhances the safety of those responding to a claim. For example, it can be used for industrial building collapses that were too unstable to allow investigators and engineers on the premises. Instead, the scanner can be set up outside to document the entire area for use in future analysis.
  • The 3-D data points collected are transferred in accordance with ASTM E2807, the standard specification for this type of data collection and exchange. Known for its high reliability quotient, it has enabled scan data to be introduced and accepted as evidence into state and federal courts.

Now that we’ve discussed the benefits of using 3-D laser scanning, let’s review some common applications:

  • Using 3-D documentation in vehicle accident reconstruction enables the investigators to have an endless number of facts and measurements at their disposal. It also allows for crush profiles to be documented with increased speed and accuracy over traditional methods.
  • Under normal circumstances completely documenting a structure fire is nearly impossible, but with a 3-D scanner a fire investigator can obtain data points of the exterior structure, offering investigators an easy way to measure necessary points after the demolition of the building.
  • Engineers can use the high definition panoramic photos captured by a scanner to assist in a structural collapse evaluation. Assessing the data points collected allows for millimeter accuracy within an HD field of vision.
  • In bridge damage evaluation, accurate documentation of the damaged area from a safe distance, along with demonstrative figures produced to objectively communicate the facts, allow for expedited resolution of the proposed repair protocols and associated costs.
  • Construction sites are in a dynamic state which can occasionally impede the evaluation of an accident. Information gathered utilizing 3-D documentation can be merged with other data—such as construction plans and aerial photos of the scene—to accurately recreate the site and illustrate the conditions at the time of the accident.
  • Using 3-D scanning to produce a floor elevation map can geographically illustrate elevation changes throughout the floor at a single point in time or show deviations that occur during an extended period of time, which help to emphasize the vital details in an investigation.
  • Advanced modeling/animation visualizations and simulations based on real-life data gathered via 3-D documentation help to present the necessary facts in a case, which can convey “what happened” to a jury in a clear and impactful manner.

Traditional forensic engineering methodology coupled with the revolutionary technology of 3-D scanning has changed the way investigators document a scene and utilize site data. The end result: capturing vital information today to that it can be used tomorrow, creating a safe work environment while reducing labor cost and time.  Call Matsen Insurance Brokers for your risk management needs.

5 Ways to Prepare for Depositions

Deposition

If you’re a claims representative who is involved in an insurance coverage litigation, be prepared to be deposed. This month’s edition of Claims Magazine offers five tips for achieving the results you need.

1. Is it relevant?

After receiving a notice of deposition you’ll need to discuss the relevancy of your testimony with counsel. If you cannot produce relevant information to the issues decided by the court—especially where the dispute involves the meaning of the policy language—counsel may object to the taking of your deposition altogether. If there’s a question about whether the insurer properly investigated the claim to determine if the allegations fell within the policy terms, your deposition may be relevant.

Depositions are most likely deemed relevant in “bad faith” litigation where the focus is on claims-management. For example, if the claims representative didn’t handle the claim properly or made decisions favoring the interests of the insurer, then the actions of the adjuster are deemed relevant.

2. Be thoroughly prepared

If the deposition goes forward, it’s crucial that you really know the file. You should understand its history and why you took the steps you did so you can handle any question pertaining to it. Preparing an outline or timeline of events is advised, as well as being able to identify and explain inconsistencies/changes in strategies or decisions. Make sure to review all emails, pleadings, contracts, policies, and other documents.

Prepare yourself for questions about the actions or decisions of other persons involved in your file by reviewing notes from your supervisor. Identify key facts and themes that are relevant to the coverage decisions by working with defense counsel. Finally, accept that that the file may have been imperfectly handled and be ready to explain and address errors or problems.

3. Know the claims manual or guidelines

Find out if your company has a claims manual or guidelines in written form and familiarize yourself with them. Identify the training required for your position and any factors regarding how to make discretionary decisions, and know whether any written statements contradict your usual practice. You may want to consult with counsel and identify cases in which your company litigated the same question in other jurisdictions and familiarize yourself with the documents produced or the positions takes in those cases.

4. Be aware of key insurance regulations

Consult with counsel about relevant state insurance regulations. If you don’t know about company procedures and protocols outside of your department, don’t be afraid to admit so. In some cases it is deemed acceptable that you have no personal knowledge about that aspect of the company’s business. For example, you may be asked about bad faith complaints filed against the company in the past, but according to regulation compliance that would likely be the responsibility of another department.

5. Prepare for a video deposition

Ask your attorney beforehand if the deposition will be videotaped. Opposing counsel may insist on a videotaped deposition because it may “throw you off” if you’re not expecting it.  If you’re going to be taped, prepare yourself as you would for a trial appearance in front of a jury.

Bottom line: If you know your file thoroughly, dress professionally, make eye contact, remain calm, and provide forthright answers, you will be able to make the case. Call Matsen Insurance today if you need help preparing your deposition.

Know Your Flood Insurance Options

Flood Insurance

Flooding can happen at any time and in almost any part of the country. In 2012, Superstorm Sandy ripped across the East Coast, causing over $70 billion in property damage to homes and businesses. It’s a startling number, made all the more so because over half of those affected by the storm were uninsured, leaving property owners and businesses without the basic means to continue their livelihood. If you haven’t given consideration to floods and flood insurance, you owe it to yourself to read the article “Why Don’t Property Owners Have Flood Insurance?” in September’s issue of Claims Magazine.

Many property owners don’t realize that their flood insurance may not offer the same categories of compensation that are standard with other policies. The National Flood Insurance Program (NFIP) was created by the US government to address flood insurance needs, which were considered too volatile and difficult for private insurance markets. Unlike most property insurance policies, typical flood insurance through NFIP does not include coverage for additional living expenses while the property is unusable, which can be months or even years depending on the damage caused in a flood. This can be devastating to any property owner, especially for businesses that are unable to operate while their location is being repaired.

However, inadequacies of NFIP programs are now being addressed through independent insurance policies. This extended flood coverage includes additional living expenses, as well as several other supplemental coverage types that will allow a property owner to get back on their feet and recover what was lost in a catastrophe.

Flood insurance, both through the NFIP and private insurance agencies, can be a complex subject. Matsen Insurance offers insurance and consultation in 27 states, and we want to make sure you’re aware of all available information about your options in case of major flood damage. For more information, call Matsen CEO, R. Glenn Matsen, directly on his personal extension at 415.692.3464 ext. 103.

Are You Prepared For Employee Theft?

Employee TheftNo matter what kind of business you run, employee theft will always be a risk. According to the article “They’re Robbing You Blind” from September’s issue of Claims Magazine, a typical business can expect five percent of its revenue to be lost through the fraud and embezzlement of their own employees. That’s a staggering amount that can affect the bottom line of any organization, and could easily cause a small business to fold.

Many employers are shocked to find that their employees might be causing such a loss within their company, and are unaware of the many ways it can manifest. Sophisticated schemes of merchandise theft and illicit reselling exist alongside small, long-term thefts from payroll or check fraud schemes. In some cases, employee theft can go on for years and never be caught because of the blind trust placed in a single individual within a company. Businesses have lost hundreds of thousands, or even millions of dollars this way, often only realizing the damages long after the responsible party has disappeared.

The impact of employee theft is huge – globally, it’s calculated at approximately 3.7 trillion per year. An average loss is almost $850,000. You might think those numbers would be skewed by large-scale fraud in the financial industry, but even the median damage of employee theft is $280,000. Few businesses can easily afford such a loss.

There are several ways to guard against employee theft, and options to insure yourself against damages from embezzlement and fraud. Our CEO R. Glenn Matsen would be happy to discuss your business and your options directly on his personal extension at 415.692.3464 ext. 103. Matsen Insurance offers insurance and consultation in 27 states, and the core of our business is making sure that you feel safe with yours.

Real or Forgery? Telling the Difference is a Fine Art

Appraising fine art is an art itself, and can prove to be one of the most daunting—albeit, intriguing—categories in property insurance.  And while an authentic art work can be worth millions of dollars, a well-duplicated forgery is worthless in comparison, so the risk of making a costly error looms large. As this month’s edition of Claims Magazine presents, it takes expert discernment to be absolutely certain of the authenticity of fine art.

When it comes to authenticating an oil painting, there are several factors to look out for—signatures, artistic styles and abilities, hand-painted versus machine-made, canvases, and provenance. The most reliable method is identifying the signature, which can be ascertained by referencing books and periodicals that contain the artist’s signature. One can also examine the artist’s style and ability and compare it to other paintings by the same artist. In a forgery there are subtle differences—such as a detailed line that is rendered blurry—that can identify a potential fraud.

Another method is eyeing the canvas. With original paintings one can see and feel the texture of the paint and the overlapping colors used. By contrast, even with high quality inkjet printers used to make giclée copies, appraisers can discover under close examination the dot matrix pattern used.

Finally, the painting’s provenance—the documentation that confirms a work of art’s authenticity—is a useful method to use. A gallery label, a signed certificate of authenticity, an artistic statement discussing the piece, receipts, an expert appraisal, or a history of ownership, leaves no doubt that an art piece is genuine. There are times when even the documents themselves can be forgeries, but a reputable appraisal company will check to ensure their veracity.

By contrast, original prints are produced by the artist or a professional assistant for the purpose of creating a limited number of images. When an artist makes prints, each one is created from a plate and is technically considered a unique work of art even though it is produced in multiples, known as an “edition.” After obtaining the print’s edition number, appraisers usually look to catalogs to confirm the numbers match the known number. Edition numbers are not an absolute indication of authenticity, although it is an important first step in the process.

When checking for the authenticity of a print, an artist’s signature should be noted on it. If the print only has the plate signature, chances are it’s a reproduction print. Another thing to look for are discernible plate marks and impressions which should be visible around the image. Taking a look under the frame may be necessary for proper examination.

Purchasing a valued work of art can be a risky endeavor. At Matsen Insurance we are happy to assist our valued clients in managing and planning for all types of risk, including property insurance. To discuss how we can help protect your assets, please contact our CEO R. Glenn Matsen directly on his personal extension at 415.692.3464 ext. 103. With us you’ll experience the exceptional service and attention to detail that you can only find with an independent insurance agency.

 

Insurance Fraud Knows No Boundaries

Agencies of all kinds have been cracking down on insurance fraud, and it’s time for this trend to continue to expand through national and international channels to fight fraud at all levels. Insurance fraud doesn’t just siphon money away from faceless corporations: the pinch will be felt even by everyday consumers as their premiums rise to compensate. September’s issue of Claims Magazine elaborates on some of the extensive fraud rings that have been busted recently in “From Pasha to Prisoner: The Story of Mikhail Zemlyansky”.

Insurance fraud often grows to encompass multiple different areas of theft and false claims. In Zemlyansky’s case, his New York crime ring included doctors, lawyers, auto repair shops, and more, all pushing false claims related to staged crashes, workers’ compensation bills, private healthcare, and Medicare-Medicaid benefits. As the largest no-fault auto scheme ever charged, it represents a growing trend in insurance fraud: a shift from small, mainly ethnic fraud rings to larger, more organized multinational outfits capable of stealing outrageous sums of insurance money.

Naturally, auto insurance, private health, workers’ comp, and Medicare have shared interest in disrupting these schemes. One new alliance, the Healthcare Fraud Prevention Partnership (HFPP), is helping to fight fraud rings by encouraging its members to collaborate and share intelligence and successful strategies. By working together, members including the Department of Justice and various anti-fraud organizations can help catch crime rings earlier in their operations, cutting off their access to more fraudulent funds. Federal courts are also taking fraud cases very seriously, handing out stiff penalties and jail terms to convicted fraudsters. By working together, law enforcement, private insurers, and other agencies can take an effective stand against would-be fraud rings, protecting themselves as well as, ultimately, the everyday people who are their clients.

Matsen Insurance takes fraud very seriously. Our CEO, R. Glenn Matsen, is a seasoned insurance broker who keeps a sharp eye out for any fraudulent activity and is committed to fighting fraud right at the source to protect his reputable clients. He works with clients directly and can be reached at 415.692.3464, ext 103. Give us a call or fill out our online contact form today to make sure your insurance services are being handled by a trustworthy broker.

Improving SIU Through Data Analytics

Special Investigative Units

As anyone who works with insurance field knows, the business is always changing. The insurance industry must be able to move quickly or risk being exploited by fraudulent claims. Special Investigative Units (SIU) are hard at work making sure such claims don’t occur. They use many different tools, but one major way to keep up with changes is through data analytics. Data is a valuable resource for insurance companies. So much that many insurance carriers are employing complex technologies and analytics at rates never seen before. Having the ability to use “big data” resources to be proactive against fraud has become a priority.

The technology has to be effective in harvesting data from internal and external sources. Then aggregating all of the information into an easy to consume format. This allows the SIU members to create strategies and claim models that can improve fraud detection, gain new insights, and predict emerging trends.

According to Claim Magazine, critical data needed to create successful claim models include policy and application details, structured and unstructured claim data, investigative results, vendor data, and industry watch list data. Also, third party data like ISO loss history, public records, medical billing data, and underwriting information. Having all this raw data is immensely important to fraud modeling.

One of the challenges of collecting all this information is that it often exists in different locations and held by different departments. It is also often in various formats and quality. First, before the information is gathered data management technology and processes are needed to clean up and enrich the data, remove duplicates, and improve data quality. Data collection is limited if the data management process is not robust. Once the data is cleaned up, technology is again necessary for gathering the information, converting it to the correct formats, and uploading the information to the correct locations so advanced analytics can be done.

Once the data has been aggregated into data sets it can be sent to fraud detection solutions and tools platform. Most platforms automatically start the fraud detection process. The processes included multiple claim models and different analytical approaches. This is combined with decision-making engines that can handle this stream of information 24 hours a day.

These tools allow companies to identify fraudulent claims based on triggers or events in the data. One identification method is scoring and ranking claims to determine fraud propensity based on values generated by complex algorithms and advanced mathematical techniques. Combined with technology and comparing scores to entire claim populations, insurance companies can determine which claims are outliers, discover questionable links, and suspicious loss indicators. By using technology, SIU teams can focus on the most egregious fraud risks.

SIU teams can also utilize this information to identify emerging trends in billing, fraud, and even geographical trends. This allows companies to create new and more effective strategies. This information can also go further than just fraud detection but can also assist medical management, subrogation claims, determining the possibility of litigation, and even managing the life of a policy. Matsen Insurance has created the best policies and fraud detection models based on all the data available. To find out how you data helps to protect you contact our CEO R. Glenn Matsen directly on his personal extension at 415.692.3464 ext. 103. We analyze the data to best help you.

Fighting Fraud with Metadata

Fraudulent Property Insurance

Fraudulent property insurance claims happen to the best adjusters and examiners. Ones where they are left questioning everything from the true cause of loss down to the documentation submitted.  However, as this month Claims Magazine explains, with the growth of technology, you can use metadata to investigate suspicious claims and suspected fraud.

Metadata is defined as “data about data.” Basically, it is embedded information about digital files content.  This information can include how a file was created or originated from (phone, camera, audio, video recording, etc.), the date and time the file was created, the creator or author, the location of the file on a computer or network, or even GPS information.

Since claim adjusters and examiners often ask for proof of ownership in the form of photographs of the stolen or lost properties, knowing how to access metadata could help decide if the claim is a fraud. Digital images are typically JPEGs, which stands for Joint Photographic Experts Group who created the standard. JPEGs come in various formats but a common one is called EXIF (Exchangeable Image File Format).

EXIF images hold a lot of valuable metadata. To access this information right-click on an image and choose properties from the drop down a new window appears with tabs across the top. One of the tabs is titled Details. In this tab you will find data that was created by the camera and data created by the computer or network the image resides.

This information can help you figure out if the image was taken before or after the loss, if it was created in the geographic area declared in the claim, if it was created by the person the claimant said created it, or if it was updated since it was created.  The data or lack of data can be very important in an investigation. But a word of caution, metadata can be removed from JPGs. Programs like Photoshop can be used to view, edit, and extract EXIF data.

Even if the metadata has been removed all is not lost (or even deleted), just hidden. It is best to use digital forensic experts who understand the complex forensics involved in finding and investigating metadata. As soon as there is digital data involved in a claim it is best to get help from experts who can also later on be used as experts, in case of litigation.

Once all the information is gathered it is best to not jump to asking the claimant why their story doesn’t match the data. Adjusters and examiners want to collect as much information, not just metadata, to discuss during the examination under oath. To find out how Matsen Insurance performs a complete investigation to help you resolve questionable claims, please contact our CEO R. Glenn Matsen directly on his personal extension at 415.692.3464 ext. 103. We work smart and hard to make sure your business is well protected.

How Predictive Analytics Can Improve Claims Outcomes

Predictive Analytics

If insurers could see the future they would be able to help their loss prevention departments reduce claim frequency and severity. Unfortunately, no one has that skill but as this month’s Claims Magazine explains we do have the tools to predict the future more accurately. More specifically, using predictive analytics to assist with Worker Compensation claims.

According to The National Council on Compensation Insurance 2015 Annual Issues Symposium, from 2009 to 2013 there has been an increase in annual Workers Compensation claims severity in 32 states. Predictive analytics can help adjusters be proactive and make informed decisions on the best way to handle these types of claims.

Predictive Analytics helps by combining all of the experience needed in resolving thousands, sometimes millions of claims, into a model to base future claims on. Instead of relying on a single person, insurers can use these models to determine which claims may possibly spiral out of control.

Errant Worker Compensation claims can cost insurers time and money. Even the best adjusters can find themselves dealing with unruly claims due to heavy caseloads, too many file transfers, lacking information, and inexperience spotting severity indicators. If a claim is flagged as possibly having high severity then insurers know that an adjuster with a high caseload or an inexperienced adjuster may not be the best person for the job.

In this regard, predictive analysis models can help determine the best person for the job. If you assign a severity score to claims based on the models created from the predictive analytics you can assign less severe claims to newer adjusters and more difficult claims to experienced adjusters. This allows employees to work at their level and get progressively harder cases as they gain experience. This type of triage creates better adjusters and saves the insurer money in regards to claims that spiral out of control.

Beyond assigning work, severity scores can be used in the claim handling process. For low severity claims, auto adjudication can be built in while increased managerial oversight can be requested for higher severity claims. With these types of processes in place, claim departments can better focus their time and energy where it’s needed.

Now, predictive analytics is great but it can never fully replace a person. Even though the best adjuster can make mistakes, a good predictive model can’t replace a human being. It helps in finding the best solution and minimizing the risks. To find out how Matsen Insurance uses predictive models to help you, please contact our CEO R. Glenn Matsen directly on his personal extension at 415.692.3464 ext. 103. We work smart and hard to make sure your business is well protected.

Stay-At-Work Programs: Benefitting Both Employer and Employee

Workers Compensation

We’ve posted previously about the necessity for employers, even small business owners, to have the appropriate workers’ compensation programs in place in case of on-the-job injury. Costs for this insurance can add up, though, and this month’s Claims Magazine discusses one type of program that can reduce these costs. If put into practice correctly, Stay-at-Work programs provide an avenue for injured workers to continue work with lighter duties while they heal, remaining involved with the company until they are able to return to their regular positions. Companies with extensive workers’ compensation costs can organize a Stay-at-Work program in a proactive effort to minimize their expenditures.

What is a Stay-at-Work program? The goal of the program is to keep an injured employee working in a temporary position suited to their physical capacity until they can transition back to their regular position, potentially resulting in no lost time from work for the employee. Immediately post-injury, the worker sees a designated physician or clinic, who knows that the Stay-at-Work program is in place and will analyze the worker’s functional capacities. They and the employer can determine a light-duty or modified-duty position that is safe for the employee while they’re healing, and eventually the employee will return to their full capacity and regular position.

Such a program has benefits for both the employer and the employee. The employee can continue to earn their full income while in recovery (as opposed to partial workers’ compensation payments), and remain connected to their co-workers and company at the same time. The employer benefits from reduced employee turnover, as employees continue coming to work even during their healing process and don’t face the more difficult task of returning to work after a long period spent at home recovering. Many of the indirect costs associated with a workers’ comp claim can be mitigated through this process, especially those involved with looking for a training a replacement worker if the injured employee does not return to work. For these reasons, unions also tend to be in favor of Stay-at-Work programs.

If you have any questions or concerns about your business’s coverage for workers’ comp claims, please contact us at Matsen Insurance. We are an independent insurance broker and offer customized plans to work for your specific situation. Our CEO, R. Glenn Matsen, works directly with clients and can be reached at 415.692.3464, ext 103. We look forward to working with you!

3 Key Steps to a Successful Workers’ Compensation Fraud Investigation

Matsen InsuranceThere’s no denying that workers’ compensation fraud has shown a dramatic increase recently. According to a Claims Magazine article, workers’ compensation fraud accounts for approximately $7.2 billion annually and is considered one of the fastest growing areas of fraud today.

Fraud may be committed for a variety of reasons including claimants’ financial problems or lack of medical insurance; employers’ trying to reduce premiums or underbid competitors; or a providers’ exploitation of loopholes or participation in organized crime.  In California, insurers are required to have a Special Investigations Unit (SIU) to handle such cases. Most compensability issues are able to be resolved by an informal inquiry, but in other cases a referral to a licensed investigator may be appropriate.

So what can you do to protect yourself from workers’ compensation fraud?

The first key step is to evaluate the potential case. Hiring an insurance company with solid experience and training is a must when looking for potential red flags in the early stages of the investigation. Fraud indicators can include things such as the claimant threatens to see a doctor or an attorney if the claim is not settled quickly; claimed injuries are disproportionate to type of accident; and/or claimant has multiple prior claims or lawsuits.

The next step is to investigate the suspected fraud using the skills of a licensed investigator with proven expertise in workers’ comp complaints. The investigator, who works with your insurance company, will be in charge of monitoring the claimant’s activities, look over video surveillance and recorded statements, review medical conflicts, and make certain that all information, documents, and records are confirmed with authenticated documentary evidence. Once the investigation is complete it is typically sent to a district attorney and the department of insurance to determine the viability of a case and whether the situation involved abuse or fraud.

Once the decision is made to proceed, it is advisable to take a solid defense posture which calls on the insistence of accurate and complete discovery. This is part of the pre-trial litigation process during which each party requests relevant information and documents from the other side in an attempt to “discover” pertinent facts, which usually include depositions, interrogatories, requests for admissions, document production requests and requests for inspection. Keep in mind that regardless of what the outcome is in the prosecution of a fraud case, under the law the workers’ comp claim must still continue during this time.

The role of the special investigations unit working closely with your insurance provider is absolutely essential in quickly and accurately gathering crucial information early on that will impact the overall outcome of a claim. At Matsen Insurance, we are happy to assist our valued clients in managing and planning for all types of risk, including workers’ compensation fraud. To discuss in greater detail how we can help you investigate a potential workers’ compensation fraud case, please contact our CEO R. Glenn Matsen directly on his personal extension at 415.692.3464 ext. 103. With us, you’ll experience the exceptional service and attention to detail that you can only find with an independent insurance agency.

Lessons from Katrina: Weathering a Catastrophe

Storm Damaged Home

It’s been ten years since the fateful Hurricane Katrina, and this month’s edition of Claims Magazine takes an in-depth look at the lessons that insurers and claims specialists should have learned from this unspeakable tragedy. A lot has changed in the last decade, but even so, there’s no denying that a catastrophe of this magnitude can come quickly and unexpectedly, taking both individuals and companies to very dark places in the blink of an eye.

Ultimately, the article addresses the failings of insurance adjusters and contractors that occurred specifically during Hurricane Katrina and how similar failings can be mediated or avoided in the event of another disaster. With billions of dollars in damages, only half of which were covered losses, not to mention the loss of life and horrifying conditions, this was a cleanup job that still haunts many people today. As insurance brokers, what can we do to ensure that we’re caring for our people on the ground as well as our clients in the event of a similar event?

Claims Magazine suggests, first and foremost, that all teams discuss disaster plans and figure out how they’ll proceed before an event of this magnitude occurs. How will the team organize? Is there a backup communications plan in place should usual methods be knocked out? What technology will you use (cellular, satellite, cloud)? Is there a remote office location that can be used as a base until the crisis has passed, and do all workers have the ability and equipment to work remotely?

All of these questions can just as easily be applied to businesses beyond insurance. Much of the damage sustained during Katrina was sustained by businesses, many of which were uninsured or unable to get the help they needed in time to stay afloat. This is where being proactive is the key to success. Speak with your insurance company to make sure you’re covered for potential disasters, and ask them pointedly if they have plans in place to take care of you during a catastrophic event. Your livelihood can and should be protected, and you have every right to do what you can to make sure that happens.

If you have any questions about coverage or disaster planning, please contact us here via our online form. If you would prefer, you may contact our CEO, R. Glenn Matsen, directly by phone at 415.692.3464 ext. 103. We operate in 27 states and will be happy to find a solution that works for you and gives you the peace of mind you need.