Canadian Underwriter
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Trial by Fire


October 6, 2019   by Glenn Gibson, Joe Toscano & David E. Bridges


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Now more than ever, it is critical for insurers to ensure they have the best expert witnesses on their side for fire and explosion cases.

A paradigm shift occurred in the insurance industry seventeen years ago with the introduction in the United States of the Sarbanes-Oxley Act (SOX), which mandated strong accountability and reporting structures in reaction to numerous financial scandals. The SOX requirements, combined with a new age of rigour in procurement, brought new discipline to most corporations.

In the post-SOX regulatory and legal environment, there is no question that if an insurer is going to prove its case and document that it acted with utmost good faith, then it must employ the best professionals available. This is particularly true in situations when an insurer is alleging that a policyholder has committed an intentional violation of the insurance contract, such as in cases involving allegations of arson.

Fire experts

In forensic fire and explosion investigations and litigation, many — if not most — matters are won or lost based upon the qualifications, methodology, and/or opinions of the retained expert witness. Selecting the right person is critical.

Management guru Steven Covey preaches: “Begin with the end in mind.” The ‘end’ in this situation is the courtroom. Your expert must not only be qualified, he or she must perform. They are teaching and counseling the trier of fact. As well, the performance of your expert is going to be weighed against that of other experts who are engaged in the matter.

In fire and explosion cases, the expert witness can testify as to his or her opinion of the cause of the fire. This is often the most important testimony the court will hear.

The trial judge will decide if the expert witness is properly qualified, and conducted his or her investigations correctly. The judge will be influenced by first impressions, the witness’s professionalism, confidence and consistency, as well as by the volume and quality of the evidence presented.

The scientific method is critical to the fire and explosion claims management process. The insurer’s third-party fire and explosion experts must apply the scientific method in every investigation.

Perhaps the most significant component of the scientific method is the testing of an expert’s theory about the fire. This requires an examination of facts and a cognitive and/or experimental challenge of those facts, as well as a challenge of any possible alternative theories.

Once a final hypothesis has been reached, it should include the identification of the ignition source, the first fuel ignited, and how the two came together to cause the fire. In addition, the expert should be able to offer proof that his or her theory has been tested and validated. In a case alleging arson, all reasonable accidental causes must be considered, analyzed and eliminated for the hypothesis of an incendiary cause to withstand challenge.

However, an expert should not be limited to simply providing an ultimate opinion on origin and cause. Experts should provide consultation and guidance based on their observations at the scene right into the courtroom. They should help the decisiBy Glenn Gibson, Joe Toscano & David E. Bridgeson-maker evaluate the case and the strategy to be employed at trial. They should weigh in on matters involving the identification, documentation, collection and preservation of evidence. Their advice should be heard on matters involving the development and evaluation of any testing of materials, devices and scenarios in a laboratory.

Choosing the right expert

To be confident that the expert you are selecting has the right qualities to deliver convincing, winning testimony requires a thorough interview and credential check. The list of questions a prospective expert must answer before being hired is long and detailed, designed to weed out those who do not have the depth of experience, professionalism, education and certifications required of a well-rounded, credible expert witness.

As well, insurers must verify that the procurement process they use to select and hire expert witnesses is formalized. The process needs to be documented, service level agreements and compliance measures should be in place with engaged experts, and there should be a system in place to ensure that information about them is up-to-date.

Insurers have an obligation to act in “utmost good faith.” The foundation for proving this is founded in the quality of your claims handling and the effective use and selection of experts. Being able to prove that you have a formal, defined process in place to select and maintain your approved list of experts will not only improve the quality of your decision-making, but will demonstrate to a court your commitment to fulfill your obligations to your policyholders.

 

Glenn Gibson’s career has spanned over four decades, during which he attained international leadership as an executive general adjuster. He can be contacted at glenngibson@gtggroup.ca if you would like to receive a longer, more detailed version of this article.

Joseph Toscano is an internationally-recognized lecturer who pioneered the development of numerous innovative programs on effective investigative techniques and solutions for the insurance industry and other professions.

David E. Bridges is an associate in Meagher & Geer, P.L.L.P.’s Catastrophic Loss Practice Group.