Inside Travelers' investigative lab
Travelers' Engineering and Loss Prevention laboratory in Windsor, Conn., known among employees as ELP, sits within sight of Interstate 91 just north of Hartford. It is a sprawling, ranch-style building that can accommodate a busload of Travelers employees that arrives for training at the facility.
Books line three walls in the lab's library, which looks more like the White House's war room than a reading area. A table littered with floor plans, depositions, fire-science manuals, and other documents related to pending claims is the centerpiece of the room.
An informal screening room that seats about 35 people is adjacent to the library. A white board spans the front of the room and a large TV is hooked up to a VCR. Today's topic at the lab is suspicious fires and how they are set.
Fire sprinklers of every type fill a hydraulics lab down the hall. Travelers' underwriters and claims adjusters, as well as personnel from other insurance companies, are trained here to recognize fire safety and potential risks associated with sprinkler systems. A sprinkler system that doesn't have enough water flow to cover an area, for example, is an unsatisfactory risk that claims adjusters must be able to recognize.
While the ELP doesn't do industrial hygiene work for individuals, it processes samples of asbestos fiber, air, and mold and fungi for companies around the world, including other insurance companies. The Travelers wouldn't divulge those insurer names. ELP also rents air-quality testing equipment to commercial enterprises.
One huge room holds ELP's lab, where 35 technicians work on industrial-hygiene, document-analysis, and forensics-analysis equipment that sit on tables in neat rows for easy access. The lab has a mass spectrometer — a machine referred to as the "black box" of the chemical-identify world. Mass spectrometers measure the amount and type of chemicals in any substance. Travelers, for example, used it in a fire investigation and subsequent lawsuit against a wealthy couple from Avon, Conn., who set their house ablaze in 1995 in order to collect the insurance money.
In another case, a document analyzer revealed a fraudulent receipt for jewelry provided by a homeowner insured with Travelers. The proof of purchase provided by the policyholder was for $9,471; however, with the aid of ultraviolet technology, ELP examiners were able to expose the fraud: The doctored receipt originally read $1,111.
Other investigators work with borescopes (flexible microscopes) to analyze ignition-lock cylinders on suspicious auto-theft claims. The borescope helps the examiners to determine whether the ignition-lock cylinder was picked or forced. Couple the borescope results with a steering-column examination, and the investigator can roughly determine whether or not the auto theft warrants further investigation. Cracking down on fraud is a clear goal of the ELP.
Fraud-busting a driving force
take the insured's word."
"We always take the insured's word [on a claim]," asserts John Machnicki, director of the ELP since 1990. However, there are 13 fire investigators and eight forensics examiners who work diligently when that word becomes questionable.
ELP investigators will routinely assist with Travelers' special investigative unit (SIU) probes. SIUs gather evidence and look for motives for fraud on suspicious claims. If the SIU officer feels that an auto theft or a house fire is suspicious, he or she will call in the ELP folks to determine what caused the fire, for example. "By understanding how the fire started, you can put the right coverage into effect," Machnicki says. If the fire was an accident, the homeowners policy will of course kick in. However, "if we find the fire was intentionally set by the insured, we'll deny the claim," says Machnicki.
In fire science, investigators can predict how a fire is going to move through a room and how the burning materials and other debris around the flames will react. For example, Insure.com got a look at Travelers' training video on how fire spreads after various appliances are ignited. The video demonstrates that a burning TV doesn't get hot enough to ignite a whole room. "There's not enough fuel in a TV to raise the temperature in the room so that it would flash over," or spontaneously ignite, says Machnicki. Instead, the TV will burn for approximately 20 minutes and then extinguish on its own. So, if a homeowner claims that his TV spontaneously combusted and burned the house down, skeptical ELP-trained claims adjusters will be on the alert for a possible fraudulent claim.
The video also documents a Mercedes-Benz sedan aflame and burning down a garage. Travelers started the fire in three different places under the Mercedes' hood to demonstrate that if a fire starts in a vehicle's engine compartment, it will take more than 45 minutes to engulf a one-car garage. ELP-trained adjusters would suspect fraud if a garage caught fire just minutes after the policyholder claimed to discover a small fire in the engine compartment.
The case in Avon, Conn., involved a couple who plotted to commit fraud by setting fire to their Mercedes in hopes of burning down their garage. But Travelers' fire investigators foiled the plan. Travelers has since re-created the exact scenario and documented it on video for future training purposes.
Being thorough, getting it right
Travelers pays almost all claims because gathering enough evidence to justify denial isn't easy.
Despite its best efforts to thwart fraud, Travelers pays almost all claims because gathering enough evidence to justify denial isn't easy. "Only a small percentage of our investigations turn up arson," Machnicki says. "When we make a call that the claim is a fraud, we better be right, because that impacts the person profoundly." That's why Travelers makes sure all 13 ELP fire investigators are certified or retired government investigators. The certification process is rigorous, requiring in-depth knowledge of fire accelerants, the physical properties of fire, and on-the-scene training. Each investigator is well-versed enough in fire science to testify as an expert at trial.
Microscope slides of every type of wood sample also help them service their policyholders. If, for example, your dining room table and chairs are destroyed by fire, Travelers can take a portion of the charred remains and correctly identify the type of wood that makes up your now-crispy dinette. Travelers tests the wood to make sure you're not trying to get the company to pay for a new cherry dining set when your original furniture was maple. By the same token, if you aren't sure of the furniture's composition, the wood investigation will reveal it.
Although checking up on policyholders after claims might seem intrusive, the ELP investigators are battling fraud, which presumably benefits the vast majority of policyholders by keeping insurance premiums down.