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By Bradley Sanders
Several years ago, a group of Colorado business owners developed an advertising and promotion program known as “Always Buy Colorado,” or ABC. The concept was simple and expected for a state that has – like most in the West – experienced a huge influx of national or multinational corporate businesses. These corporations were threatening the economic health of local businesses because of the power such corporations enjoy over local, single-business operations: greater advertising budgets; larger orders from manufacturers leading to lower product costs, etc. It came down to the Davids of the corner market and neighborhood hardware store pitted against the Goliaths of WalMart and Eagle Hardware. The campaign has been relatively successful and appears to be continuing to serve its mission of educating the Colorado consumer to the value of patronizing locally owned and run businesses.
But how in the heck does that relate to fraud investigations? Quite well, actually. The Davids – local or regional small- to medium-sized “vendor” investigation companies – are constantly under threat from the Goliaths – Equifax, InPhoto and the other large, national companies. With that in mind, I want to help educate my peers (the Davids) on how to compete against the Goliaths. I also hope to educate potential clients about the benefits of working with quality independent investigation companies. As a disclaimer, there are certainly times and instances when the larger companies are useful: especially when a client is looking for reliable investigations in a new city but has not obtained referrals to a proven independent investigator. I am also focusing here primarily on insurance investigations, and therefore, my comments and observations relate primarily thereto.
So, the question of the day is: How does an independent investigator succeed in business competing with the large, national companies? The answer: by doing his level best to fully, fairly and competently serve his clients.
A recent “Dear Sherry” column in this publication reflected two common problems between clients and vendors. One letter-writer noted that “…the vendor we used to obtain the photos is no longer in business.” In the letter immediately following, the writer was trying to determine if a claimant’s address was valid or a mail drop. He asked, “…short of sending an investigator to look it over, is there an alternative means to checking (the questionable address)?” Here is a client who needs investigations but is not willing to pay for them and a client who suffers because an investigator went out of business. The irony of the juxtaposition of these two letters helped to inspire this article. Clients can ensure that their investigator will be there for them in a time of crisis if they simply use the investigator to his or her fullest extent. Let me elaborate.
The writer who sought information on the address spent a good deal of time chasing wild geese. He looked through various databases and resources, wrote a letter to “Dear Sherry,” and finally, waited until the edition of the John Cooke Fraud Report arrived in the mail for an answer. On a per-hour billable basis, those efforts probably cost more than simply sending an investigator out in the first place. And looking at the situation logically, an appropriate investigation should include field work to confirm one’s questions as to the nature of the address. At the same time, the investigator may have otherwise been idle and would have welcomed the opportunity to check the address immediately. He has just had several opportunities slip away from him: the opportunity to earn money for his company; the opportunity to assist a client; and the opportunity to establish an investigator/client relationship that may lead to future work. Likewise, the client has lost several opportunities: the opportunity to find a local expert to assist with a claim; the opportunity to gain information from a professional about aspects of the address that may not be readily apparent in the sterile world of computer data; and the opportunity to establish a relationship with a reliable investigator who could be called upon in the future for other investigations.
The end result is that we all lose, investigators and clients alike. If enough instances like this occur, the investigator closes his office due to a lack of business, the client has no reliable established investigator in the area, and claims may be compromised.
Let’s compare the two investigation resources available to most clients – the large corporate company and the smaller independent company. The corporate company has vast resources, such as geographically diverse offices, all the databases and electronic bells, whistles and gadgets imaginable and a large staff. The company pays a significant amount of money to maintain those resources, and they are always there when a client needs help. Well, at least the corporate name will be there – there is no telling who will actually be working on your case this time around. It may be the same associate; but then again, it may not. While there are certain minimum standards and qualifications of experience and training for the corporate associates, there is still the unknown quality of how a particular individual will handle a given case, as well as how he or she will interact with you, the client. If a given associate performs poorly on the case, he may be reassigned, demoted or dismissed, but the company continues. However, if the independent investigator performs poorly, it could mean the permanent loss of a client – an eventuality that could be highly detrimental to the viability of the company. Doing a good job is crucial to the independent investigator, because his personal reputation – and therefore the future of the company – is on the line.
Establishing lasting relationships in this business is one of the most important ways of effectively crafting an investigation to suit the needs of each client. Even within the same insurance company, subtle adjustments must be made to the investigation and reports must be based on the needs of the individual examiner or SIU person handling the claim. Also, because the parties know one another so well, the investigator can better anticipate issues that are critical or concerns regarding billing practices, and above all, can better form that trusting relationship that makes for a powerful team approach to a given case.
Complaints from clients about independent investigators are varied and valid, yet they are surmountable. The most prevalent of these are related to communications, turnover time and billings. The first can be handled readily by the investigator if he simply keeps in touch. Find out up front from the client what time constraints there may be on the case. Find out how often and in what form the client wants updates. At a bare minimum, the investigator should communicate case status to the client by phone or through a short written report every week or two. Even if there is nothing to report, the investigator should let the client know that the case has not been put off or forgotten. The final report should be clear, concise, complete and professional. Remember, the final report is a strong reflection on the quality of the investigations. This communication ethic holds true for budgets, too. The investigator should obtain a budget up front, work within that budget, keep the client apprised of costs and expenses and avoid surprising the client with unexpectedly large billing statements.
An SIU investigator for a large national insurance company related that she had recently stopped using an investigation company because she had received a large bill, including items that had been billed at investigation rates although they clearly did not require an investigator. In addition, the bill included hours and expenses for making several apparently unnecessary trips to the same courthouse for records. This insurance company had regularly utilized the services of this investigation firm, yet the principal of the investigation company either did not perceive, or did not care about, this billing problem. Instead of adjusting the bill to reflect the noninvestigation time and eating the time for those unnecessary repeat trips to accomplish what should have required only one trip, the big bill went out. That investigator will get paid for the excessive bill, but at what cost? Contemplate the loss of income, tens of thousands of dollars over just a year or two, from losing cases from that one insurance company. Remember investigators, just because a client is a large insurance company, doesn’t mean it isn’t looking closely at the bottom line. The SIU person or claims examiner has to justify paying your bill to his or her supervisor; the investigator cannot back the claims handler into a corner by tendering an unjustifiably large invoice.
The solution to the problem of turnover time involves communication, education and understanding between the investigator and the client. Unless the client has the investigator on a retainer contract (which appears to be rare), the investigator must rely on multiple clients in order to stay in business. Those clients must be aware of each other’s existence and must understand that conflicting time commitments can quickly become a major conundrum for the investigator. Independent investigators are constantly juggling budget, case load and staff in order to reach that perilous and rare balance of having enough qualified staff on hand, available to competently handle cases, and having enough cases in house to financially support that staff and the associated overhead. For that reason, independent investigators often keep only a few full-time employees on staff and utilize colleagues or contract investigators for overflow work. Ask any independent investigator whether there is any semblance of continuity in, or predictability to, case load. He will either roll his eyes and become catatonic, or he will just walk away emitting a semi-crazed giggle. For the independent investigator, it seems that at any given time, either no client needs an investigation or every client does “now, on the double, immediate priority, yesterday!” Clients, please understand that there are often conflicting time demands for an investigator; and investigators, please communicate your scheduling constraints with your clients. They will usually understand and work with you on deadlines.
Large corporate investigation companies have their place in the scheme of things, too. A client can generally rely on the predictability of the product whether the investigation is in LA, New York City, or Enid, Oklahoma. When a client does not have an established independent investigator in a given locale, the corporation may offer security and predictability. Sometimes – though not often – the corporate investigation company offers greater resources than the independent. However, a quality independent investigator will generally have, if not the actual resources, access to the resources through his or her networking with other independent investigators. And the corporate representative in a given location may be a long-term, excellent investigator that the client has counted on for years. By no means should that person be disregarded. He or she is a valuable commodity to the client and should be utilized accordingly.
Another sticky subject is economics. Independent investigators must be competitive with each other and with the corporate investigation companies. This means that independents must keep their rates similar to the corporations and must keep up-to-date on training and technology. Independents send themselves to conferences and seminars; pay for hotels, meals and airfare; and lose income while away from the office attending these events. They must obtain and keep the same licensing, bonding and insurance coverage as the corporations, and they must subscribe to the same databases and other investigation-related resources. Because of the economic realities of life as an independent investigator, they don’t rent suites at glitzy hotels in order to drop the big bucks wooing and influencing the powers that be in the insurance companies or large corporate clients. But good business is not about schmoozing; it is about integrity, quality and loyalty. Good independent investigators have a vested interest in providing the best product available. They may not be flashy, they may not have hot, eye-catching marketing materials, and they may sometimes be a little rough around the edges, but the good ones remain successful in it through a passion for the profession and with a commitment to their business.
All of which leads to a request to clients: please send work regularly! Both investigators and clients must make a commitment to each other. Few clients will enter into a long-term contract for services with an investigator, leading the investigator to hope and pray the client will throw out more than the occasional case. While there are periods when a given client legitimately has no work to send out to an investigator, some cases that could be referred out are left on someone’s desk for a plethora of reasons. Though these reasons are often legitimate and understandable, it is important to maintain and preserve a valuable resource – the investigator. The more cases received from a given client on a regular basis, the more the investigator can rely on that client for business and income and the better time and resources can be budgeted. That allows a better focus on cases referred by regular clients, and it avoids the investigator having to scrape around for filler work in the interim. Few insurance company or corporate representatives are, or have ever been, self-employed. Most clients are used to counting on a regular paycheck and enjoy knowing that a consistent amount of money will be coming in month after month (though most would chose a larger amount if they could). Independent investigators do not enjoy that safety net. As an entrepreneur, the independent investigator has chosen to work with that lack of a predictable income, but most would bend over backwards for a client who can provide a more predictable income.
So is this just so much whining from an independent investigator facing the prospect of losing clients to the big corporate investigation companies? No, it is an effort to educate both the investigation community and the clients. When Gotcha Covered Insurance Company decides to use Mom & Pop Detective Agency to chase down and confirm an address, it may prevent the examiner at Big Umbrella Fidelity from being unable to get those valuable photograph negatives because Mom & Pop went out of business due to a lack of cases. Likewise, if Mom – the marketing genius of the operation – works hard establishing relationships with both Gotcha Covered and Big Umbrella, she and Pop maintain communications with the examiners from both companies, and they keep providing excellent investigations, then Mom and Pop will likely enjoy a long and prosperous business career, while their clients will benefit from knowing that they can count on Mom and Pop to be there for them for years to come.
Bradley Sanders is an independent private investigator, specializing in surveillance cases for the insurance industry.
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