David Lewin, Managing Director
The use of individual surveillance technology and monitoring to avoid insurance fraud is being discussed in the casualty insurance community – not just in Switzerland but also all over the world. The most recent driver of this in Switzerland, however, is a decision made last year by the country’s supreme court.
In July 2010, the Swiss Supreme Court (Court) handed down an interesting judgment regarding an insurer’s right to use individual monitoring to uncover fraudulent claims (Judgment of July 2, 2010, 5A_57/20). (1)
In its decision, the Court raises the question about the extent to which insurers can use individual monitoring and surveillance to form a legitimate interest. It clarifies the scope and limits of Art. 28 ZGB (Swiss Civil Code). According to the regulation, any person whose personal rights are unlawfully infringed upon may bring a suit for protection against those causing the infringement. However, an “infringement” may be justified by the consent of the person whose rights are infringed upon by an overriding private or public interest or by law. Simply put: if a person consents to “infringement,” it is not unlawful. This has significant implications for insurers.
The case below provides clarity into how much an insurer can use surveillance technology and individual monitoring.
In 2001, the claimant was injured in a traffic accident and claimed compensation for injuries suffered and the subsequent inability to do housekeeping (Haushaltsführungsschaden). The claimant brought several actions against the third-party liability insurers of the driver. (2) However, the claimant’s statements were not clear and lacked evidence. Further, the claimant was found to be contradictory. One of the insurers became suspicious and had an insurance fraud surveillance expert monitor and videotape the everyday activities of the claimant. The outcome of the investigator’s surveillance report and video footage was used as evidence by the insurer that, contrary to the claimant’s allegations, he was able to go shopping, carry loads without major problems and wash and polish his car. For that reason, the Cantonal Court and the Appeal Court dismissed the claimant’s action for damages.
The claimant then changed his strategy and brought a new action (the case at hand) based on Art. 28 ZGB, alleging the insurer (and its staff), the surveillance company (and its staff) and the insurer’s lawyer violated his right to privacy and protection in accordance with Art. 28 para. 1 ZGB. He then called for compensation at SFr5000 (approximately USD6900) each, among other things, and to hold the defendants jointly and severally liable. In addition, the claimant’s companion, who was observed in some of the pictures and in the video footage, participated in the lawsuit as a joint claimant.
The Court upheld the Cantonal Court’s decision and dismissed the entire case.
The Court stated that, pursuant to Art. 28 para. 1 ZGB and as a basic rule, any infringement of the rights to privacy and protection is against the law. However, it is not against the law if there is a justification by the consent of the person whose rights are infringed upon, by an overriding private or public interest or by law. The Court thereby referred to a previous judgment, saying that the use of individual expert monitoring could generally infringe upon the claimant’s rights to privacy and protection.
However, the Court held that such infringement may be justified by an overriding private or public interest. Since insurance fraud would affect the levels of premiums charged, the common interest of all insured persons could be affected. As a result, the Court identified the common interest of all insureds to fight off unjustified, fraudulent claims as being such a common interest.
Because of this, the claimant’s interest to privacy had to be weighted against the common interest of the insured’s community. That is exactly what the Court did when it pointed out that the claimant failed to perform his duty to disclose information to the insurer. Therefore, it was the claimant himself who brought about the individual monitoring and surveillance. The individual monitoring and surveillance was not based only on an initial suspicion, but there was reasonable evidence that made the surveillance necessary in an objective way.
Further, the Court held that there were additional factors giving rise to the legitimacy of the surveillance and individual monitoring in the case at hand. The Court pointed out that the amount in dispute, the activities and the locations that had been monitored and reported – as well as the surveillance timeline – had to be taken into account.
Faced with these circumstances, the Court had to consider that the amount in dispute was fairly high at SFr2 million (approximately USD2.7 million), the surveillance was limited to everyday activities only in public places and the surveillance period was clearly restricted to a certain period for example, two or three weeks).
Based on these findings, the Court decided that the insurer’s right to use individual monitoring and surveillance would prevail over the insured’s right to privacy.
As far as the claimant’s companion was concerned, the Court stated that she was not subject to the surveillance order so there was not even an infringement in respect of Art. 28 para. 1 ZGB. In fact, the surveillance order was explicitly limited only to the claimant’s everyday activities. Consequently, all pictures and video footage that included the claimant’s companion had to be classified as having been made by coincidence, but not in a systematic way (called an “undesirable by-catch”).
This case gave the Court the opportunity to enforce its prior jurisdiction with reference to insurer’s interest in individual monitoring and surveillance cases vis-à-vis the insured’s rights to privacy and protection. Although there is a clear tendency to protect individual privacy throughout Continental Europe, the use of individual surveillance technology and monitoring of insured persons seems to be widely accepted – as long as there are clear implications for insurance fraud. In that context, the insurer’s right to use individual monitoring and surveillance is, as a basic rule, limited to cases where these measures are objectively necessary and appropriate.
Consequently, a short and clearly defined surveillance order restricted to public places is much easier to justify than long lasting monitoring of private activities that also includes private places.
1 Cf. BGE  136 III 410 et. seq.
2 Cf. BGE  4 C.166/2006 dated August 25; LGVE  I Nr. 29.
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David Lewin, Managing Director