Thinking | 1 September 2016

Review foreshadows an end to insurance surveillance

On 5 May 2016, the ACT Minister for Justice and Consumer Affairs announced an independent review into the regulatory framework for non-government surveillance in the ACT. The resulting Report was released to the public for comment on 11 August 2016. The Report makes recommendations in relation to the regulation of surveillance, including a proposal for surveillance in general to be prohibited except for in very limited circumstances.

Although the Report makes a commendable effort to propose regulation of surveillance, its recommendations have some unusual practical ramifications. In addition to effects on the general public, the proposed changes have the potential to significantly prejudice the interests of insurers and self-insurers in the Territory, particularly when it comes to fraud prevention.

Overview of recommendations

In short, the Report recommends:

  • A general restriction on surveillance in the ACT. Visual observation, tracking and data collection are singled out, but in fact the Report, suggests regulating any type of surveillance that does not just involve a ‘listening device’ (which is already covered by the Listening Devices Act 1992 (ACT)).
  • ‘Exceptions’ to the restrictions if the surveillance is conducted to reasonably protect a person’s ‘lawful interests’ or if it is in the ‘public interest.’ The exceptions are more complicated than they appear. These are discussed below.
  • The subject of surveillance gives ‘current and specific’ consent, presumably to be surveilled, but the Report does not actually clarify this.
  • Tracking the geographical location of someone using a network or computer (including social media) should be prohibited where the person has not given consent for their geographical location to be shared on that network or computer system.
  • An exception for ‘inadvertent’ observation, but a court order would be required for communication or publication of inadvertently obtained information.
  • Courts should retain a discretion to admit evidence obtained through surveillance, whether reasonably or not, where it is used to protect a principal party’s lawful interests.
  • Expanded remedies for contravention of the restrictions, including monetary compensation.

Disproportionate impact on insurers

The recommendations appear to be aimed at insurers and self-insurers who use surveillance to verify the functional status of claimants. Whether this is the intention or not may be irrelevant. However, the report clearly recommends a general prohibition upon surveillance in the ACT and the two exceptions contained in the Report are unlikely to apply to insurance companies defending civil personal injury claims.

Exception 1: surveillance in the ‘public interest’

The report relies heavily on the newly enacted South Australian Surveillance Devices Act 2016 to call for a limited exception to surveillance that is in the ‘public interest’. What the Report fails to recommend, or even identify, is that sections 3 and 5 of the South Australian legislation allow surveillance of activities that either occur in or can be viewed from a public place. Similar exceptions are also contained in the Victorian and WA legislation, yet those sections are also not mentioned in the Report. In our civil litigation experience, most if not all surveillance is undertaken by insurers occurs in public places. A minority of the surveillance captures activities on private property, but from a public place. Regrettably, these are facts that were not investigated in the process of preparing the Report, which is part of a greater problem we will return to in the conclusion.

If the ‘public interest’ exception is adopted by the legislature without the unmentioned exceptions for surveillance in public places, surveillance of claimants in ACT civil proceedings is unlikely to be considered lawful. No cases have considered such a question,1 but in Voitenko v Zurich2 an insurer attempted to use a subpoena to acquire police-obtained surveillance of a claimant. The insurer submitted that:

it is in the public interest for fraudulent claims to be investigated by insurers and for the Court to have available to it all evidence that may be relevant to determining whether the claim is fraudulent.

Although the Court decided to determine the question of public interest at a later date, the examples it provided of such cases were limited to surveillance relating to ‘a serious criminal offence’ or ‘[i]n civil proceedings… where allegations of fraud or other criminal activity are alleged’. Accordingly, it does not appear likely that an insurer, in defending a personal injury claim, would be able to persuade a court that obtaining surveillance of the claimant would be in the public interest where there are no specific allegations of fraud or criminal activity.

Exception 2: surveillance for ‘reasonably necessary’ protection of someone’s ‘lawful interests’

The Report accepts that courts have been reluctant to define ‘lawful interests’ and that whether the interest is lawful will depend on a case by case basis. It is conceivable that an insurer’s interest in defending a disputed claim could constitute a ‘lawful interest’. However, most of the Australian authorities that comment on this term do so in the context of criminal activities: see the summary in DW v R3, a recent decision not cited by the Report. Extrapolating the reasoning in those cases to civil personal injury claims would be an uncertain process.

Much will also depend on the wording of any new legislation, and the content of an explanatory memorandum. The Report uses the term ‘person’, although the Listening Devices Act 1992 (ACT) uses ‘principal party’. That term is defined as being a person capable of speaking or being spoken to. It is unlikely that this definition would include a corporation, so if the same wording is used in new surveillance legislation the exception would not apply to surveillance obtained by an insurance company. We also note that the lawful interests exception in the Listening Devices Act 1992 (ACT) only applies where the other party has given consent to be recorded. We discuss the obvious conflict of requiring consent for general surveillance below.

Impact on insurers

Surveillance is clearly used by insurers as a tool to proof allegations of incapacity in order to identify fraudulent claims or to reduce their financial exposure in compensation claims where fraud is not involved. As submitted in Voitenko:

Undetected fraudulent claims impact on and reduce the amount of funds available to pay claims by pursued by [sic] honest policyholders. In addition, insurers paying out fraudulent claims results in an increase of premiums for all policyholders.

There is some force in this submission, considering that the New South Wales government recently set up a task force to specifically tackle fraudulent Compulsory Third Party motor vehicle insurance claims.4 This was followed by a report from Insurance Australia Group finding a 30% increase in fraudulent insurance claims.5 It is somewhat surprising that the Report did not comment on, or at least consider, the role of surveillance in preventing this kind of activity.

Unusual practical ramifications

In addition to the impacts of the recommendations on insurance products in the Territory, the recommendations have the potential to impact both insurers and the general public in some unusual ways.

Consent could be a pre-condition to lawful surveillance

The Report suggests that ‘current and specific’ consent should be obtained from the subject that is to be surveilled. The recommendation is derived, without explanation, from a concept employed by the Privacy Act 1988 (Cth). That legislation applies to the collection of ‘personal information’, which usually involves a process where the person is asked to provide the information as a necessary step in the process (for example, by making an application for a drivers’ licence). It is apparent that the nature of surveillance differs from the provision of personal information in this way, and it is disappointing that the Report does not provide a better justification for the recommendation as a result.

For insurers, there is a question about whether consent could be obtained as part of issuing the insurance policy. Many entities that collect personal information do not truly provide an option not to consent to the dissemination of the information. More likely, if consent is refused the process that requires the personal information is by default refused. It is conceivable that insurers could take the same approach, declining to provide insurance coverage unless the policy holder consents to be surveilled in the event of a claim. Where insurance is taken out by a third party (for example, a workers’ compensation insurance policy), the situation would be more complex but it is still possible that an insurer could integrate a requirement for employees to provide consent before issuing policies to employers in the Territory. Regrettably, the legislature will not able to rely on the Report to find any useful ways of dealing with these kinds of issues.

Posting a video to social media could require a court order

The Report recommends that ‘communication or publication of the results of inadvertent observation…should be regulated through requiring a Court order’ (our emphasis). On this basis, any photo or video that happens to capture unknown bystanders would require a court order to share, whether it is on social media or with family. A business would also require a court order before disseminating CCTV footage that records people going about their daily life. The recommendation is apparently limited to ‘private activities’, but this term is separately defined as including being able to ‘track a person’s movement’. Since this is possible with a simple photograph, not to mention a video clip, the distinction of ‘private activity’ is effectively meaningless. The Report also attempts to provide an exception for the ‘public interest’, although interpretation of this would be fraught with difficulty and likely require the person wanting to share the material to argue the point in Court anyway.

Looking at someone’s social media page could be illegal

The Report also appears to assume that all network or computer systems that publish location data seek consent from the user to do so. Accordingly, it is suggested that surveillance of people who do not provide such consent should be prohibited. Unfortunately, it is unlikely that all social media or other network programs actively establish this kind of consent. Furthermore, it would be completely outside of the scope of ACT legislation to force social media operators to do so. Should the recommendation be accepted, it would have the result of making it illegal to merely look at a less-informed user’s social media page. It goes without saying that the prohibition would be entirely unenforceable.

Compensation might be payable, but it could be impossible to calculate how much

The report also recommends considering ‘low level monetary compensation’ as a remedy for breaches of the surveillance regulations. Neither the report nor the Australian Law Reform Commission (ALRC) report on which this recommendation is based suggests how such compensation would be calculated. The ALRC report compares the idea with the federal telecommunications legislation that grants compensation for defects in the provision of essential communication services. We note, however, that compensation payable under that regime is based on objective factors such as the number of days that a telephone line has not been installed. Ultimately, it is difficult to see how mere surveillance could result in identifiable economic loss or quantifiable pain and suffering, particularly if it is in a public space.


In our view the Report represents an idealistic plan intended to protect privacy above all else. It clearly has not considered some of the practical ramifications of its recommendations, either in the context of insurance products and fraud prevention, or how new surveillance legislation would apply to the general public.

In this regard, it is worth mentioning that the first term of reference for the Report was to consider ‘the occurrence and use of surveillance in civil litigation claims in the ACT.’ The Report in fact does not measure, estimate or even comment on how surveillance is currently being used in the ACT. It nonetheless proposes significant changes to surveillance regulation. In our view, this explains many of the unintended difficulties posed by the Report’s recommendations. There is clearly little if any connection between the Report’s recommendations and the current use (or any possible misuse) of surveillance in civil litigation claims in the ACT.

Submissions can be made in relation to the recommendations proposed by the report until 1 November 2016.

1In our view, because such a restriction has never before existed in Australia.
2Voitenko v Zurich Australian Insurance Limited [2016] NSWSC 324
3(2014) A Crim R 192


Matthew Needham

Matthew is a highly experienced statutory insurance lawyer specialising in claims management and workers' compensation.

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