Periodically we receive requests from insurers and their insureds for information on our approach to handling examinations under oath. Examinations under oath are often associated with insurance fraud concerns. This article provides a general overview of this investigative option open to insurers.
An insurer has various options to assist in assessing whether to pay a claim made by its insured and/or how much to pay. These include, but are not limited to, written statements or recorded interviews from an insured (usually taken by an insurance adjuster) or statutory declarations (usually submitted by an insured or their representative). If an insurer has concerns with the information submitted by an insured, a further option available to insurers is an examination under oath of its insured. These examinations are essentially an interview of the insured conducted by the insured’s lawyer or other representative and recorded by a court reporter. These interviews provide an insurer a sworn, detailed, unedited, firsthand account of the loss by the insured.
An insurer’s authority for requesting that its insured submit to an examination under oath is based in legislation and/or the insurance policy itself (for home owner/commercial policy losses). In cases of auto property damage, the authority lies in section 6 of the Statutory Conditions under the Insurance Act, while for accident benefits it is found under section 33 of the Statutory Accident Benefits Schedule (SABS) to the Insurance Act. With respect to claims arising from auto accidents, an insurer may examine its insured if the insured makes a claim for accident benefits or a property loss. For third party liability issues, an insurer can only insist on a statutory declaration from its insured. For claims arising from uninsured or unidentified automobiles, an insurer can only insist on a written statement from its insured.
Section 33 of the SABS to the Insurance Act provides some particulars relating to examinations under oath. An insured is only required to submit to one examination if the loss arises from an auto claim. An insured is not required to attend for an examination under oath if he or she is incapable as a result of a physical, mental or psychological disability. An insured is entitled to be represented by a lawyer or other representative at an examination under oath. The insurer is required to limit the examination to those issues relevant to the insured’s claim for benefits and the circumstances of the loss. If an insured fails to attend an examination under oath, an insurer is entitled to discontinue payment of benefits. With respect to homeowner and commercial policies, an insurer may request examinations under oath from an insured as often as is reasonable for an insurer to effectively investigate the loss.
Examinations under oath are not a substitute for a thorough field investigation. Document collection, surveillance, witness interviews and other available inquiries should be concluded before demanding an examination under oath. Most insurers recognize that examinations under oath are a valuable tool for insurers assessing and settling claims even if fraud is not suspected, for example, in scenarios where there is no tort action but only an accident benefits claim. This is because, amongst other reasons, it provides an insurer an opportunity to assess an insured prior to mediation or arbitration.
If examinations under oath are viewed by an insurer as part of its strategy in evaluating a claim and demonstrating that a claim has been handled fairly, it is important to have the right person conduct the examination. The person conducting the examination does not need to be a lawyer, but it should be someone who is skilled in asking questions and conducting a cross-examination. Using a lawyer should be considered if the insurer is concerned about putting an objective buffer between itself and the insured, responding to issues of relevance raised by an insured during the examination, and establishing a formal record.
The art of conducting examinations under oath is a greater consideration if fraud is suspected. Examinations under oath usually start with open questions designed to elicit information and an explanation from the insured. Evidence as to motive, opportunity and rationalization should initially be elicited this way. The interviewer than, often through intuition, has to make the transition from an open interview to cross-examination. The art of examinations under oath is delicate in that even during the cross-examination phase, the examination must be conducted with an insurer’s duty of good faith in mind – or to state otherwise, it must be conducted in a balanced and reasonable manner.
Of course examinations under oath do not deter some insureds from blatantly furthering fictitious claims or fudging the truth and exaggerating their claims. But as they do provide sworn evidence, they may provide an insurer grounds to support the exercise of their duty of good faith and at the same time their grounds to refuse to pay a claim, justify a reduction in the amount paid, cancel a policy, or even seek a prosecution for perjury or other criminal sanctions. As a result of the consequences to a deceitful insured, examinations under oath are one of the most efficient and effective options open to an insurer to investigate and assess a claim as they provide an insurer an opportunity to directly obtain from its insured the circumstances and quantification of the loss.
At Investigation Counsel PC, we are experienced in conducting examinations under oath for insurers. For further information, contact us