It is accepted that insurance fraud continues despite the fact that it is an illegal practice. Is it seen as revenge against the ever-increasing premiums of insurers, but who strive to avoid paying claims when they come? Insurance fraud is a problem and costs around £3bn a year. The festive season is notoriously bad: in the New Year, applications increase by 40% as Christmas overspending catches up.
The industry can’t take it anymore and has introduced techniques developed by the US police called ‘Cognitive Interviewing’. It is used to expose the lies of insurance scammers who don’t know they are being questioned.
A UK company based in East Grinstead, West Sussex, is a pioneer in the technique and has many of the leading insurance companies. When their investigators contact claimants, they act like they are the insurer so as not to arouse suspicion. They pride themselves on saving, per 100 cases, a sum of £37,000 and as we know fraudulent claims are worth a lot of money every year – 15% of all favorable claims so if the whole industry used this technique they could do great savings
The £3bn is largely claimed on motor insurance policies; the most suspicious are fire damage claims and unusual travel and housing claims. Ultimately, dishonest claim filing directly affects all policyholders and increases their premiums.
Lately, insurers have relied on the covert use of lie detectors when handling telephone claims, but they also worried that rigorous questioning might actually offend ordinary customers. At the East Grinstead company, they use psychological techniques as part of general conversations. “We build a relationship with the client, which is great if they’re genuine. It’s also good if they’re not,” said Gabrielle Ashley, founder of ACM with Bill Truemen, a former fraud specialist at Lloyds TSB and Direct Line.
The first step is to compile a written ‘blank version’ of the case from a telephone conversation with the claimant from the time they discovered the problem until they contacted their insurers. They then ask questions and prove various points to get different perspectives. said Mrs. Ashley. “If you’re telling the truth, it’s coming from the left side of your brain’s filing cabinet. If you’re lying, it’s coming from the right side, and you change your language and the tenses you’re using.”
Decisions to reject claims have only had a 1% appeal rate and no one has taken them to the policyholder advocate or court despite having heard more than 3,500 cases.
Other insurance companies are developing their own versions of cognitive interviewing. But some companies remain skeptical about these methods. Norwich Union does not consider any single fraud detection system to be a ‘silver bullet’. They take a layered approach, combining a framework of technology-based and manual controls. As part of this, they seek to balance the twin goals of improving fraud savings with minimal impact to their genuine customers in terms of delays or other inconvenience.