Insurance company snooping leaves a nasty taste

The news that ethically bankrupt so-called private detectives have been used by insurance companies to snoop on claimants is one of those hidden, yet commonly known despicable acts that have become a feature of corporate life.

Having these people, many of them discredited former customs, military and police officers rummaging through ordinary people’s lives was once the preserve of the tabloid newspapers.

Some of us have heard in the past of a shopping lists of services, from itemised telephone bills, to NHS records to details of vehicle registration numbers and criminal records.

For decades what used to be Fleet Street would regard it as a feather in their cap that their contacts in state departments, who not only had signed the Official Secrets Act but were ethically obliged to defend its very principles, would illegally share these details with unauthorised people in return for cash. But that large corporates could resort to using these dubious characters, in the belief that since claimants were claiming huge sums of money therefore they had an obligation to protect policyholders’ money, is ethically flawed.

Professional ethics and corporate governance are not a mix and match counter, senior executives cannot determine on their own warped sense of obligation when they should resort to the dark arts of prying in to people’s private lives on dubious grounds. In a mature society grounded in sound ethics and social morals, if they suspect that someone is making a fraudulent claim there are state institutions in place to deal with such cases.

It is the duty of law abiding citizens, individuals and corporates, to use the appropriate institutions of law. That is what is embedded in the democratic principle of rule of law. The hands off, deniable use of what is little more than organised gangsterism must not be given a free pass in our society.

This is clearly an issue for the City regulator, one which it should dig right to the bottom of and bar the individuals issuing the instructions or briefing the ‘private detective’, and fining the firm prohibitively heavily. Of course, we cannot be naïve and pretend that crooks, organised and just greedy, would not chance it and try to rip-off organisations, especially financial services firms.

Many of us are familiar with those faking their death, usually in the Sub-continent, sometimes after taking out massive insurance policies.

But that is the point. They know, and we know, that if they play fast and loose and are caught they will be punished by the courts. There is a line in a decent, law-abiding society that we should not cross, no matter what the temptation. It could be as simple as cheating on travel fares or fiddling office expenses to something more significant.

That does not mean that you are always going to be believed; nevertheless morals are public expressions of individual belief.

A couple I know recently had an experience that falls right in to this matter being discussed here. The family car, registered in the wife’s name, was being driven over one of the London bridges above the speed limit and was captured by CCTV.

A few days later the ticket arrived at their home with a fixed penalty for the wife just as she was about to leave for work. She took the letter from the postman, took it to work, put a cheque in the post and sent it off. On her return home, she told her husband, who said she should not have paid, since he was driving the car he was obligated to pay – it was his civic duty. They wrote off to the authorities pointing this out and asking for the records to be corrected where upon they were accused of dishonesty, taken to court and heavily fined. Unfair, yes, but that is the nature of risk; sometimes the authorities, in a mad rush to suspect every accused, can get things wrong.

If snooping on claimants was the only discreditable corporate thing done by some insurance companies it would still be objectionable, but just the right side of tolerable. We live in an imperfect world. But it is not. Many companies routinely break the law, or at the very least sail so close to breaking the law that it becomes a technicality.

Many, large and small, behave in such an unethical way that stealing client lists from partners becomes just another marketing process. What is really worrying is that sometimes the senior executives in these organisations, and the people charged with supervising and regulating them, do not even realise the extent of the unethical behaviour.

Many companies routinely break the law, or at the very least sail so close to breaking the law that it becomes a technicality.

We have said before that moving towards a more ‘professional’ environment is not just about passing a multiple-choice exam, but a question of individual and corporate behaviour, of sometimes giving the innocent victim the benefit of the doubt, of saying sorry when you are in the wrong.

I, personally, would not trust anyone who fiddles their expenses or short-change customers; nor would I have any confidence in a company or institution that tries to cover its tracks when caught with its hands in the cookie jar.

Hal Austin is Editor of Financial Adviser