Cognitive interviews decipher fraudulent claims

It is accepted that insurance fraud continues even though it is an illegal practice. Is it seen as revenge against ever-increasing premiums from 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, requests jump by 40% as Christmas overspending catches up.

The industry can’t take it anymore and has introduced techniques developed by the United States police called ‘Cognitive Interviewing’. It is used to expose the lies of insurance fraudsters who do not know they are being questioned.

A UK company based in East Grinstead, West Sussex, is a pioneer in the art and has many of the major insurance companies. When their investigators contact claimants, they act as if they are the insurer so as not to raise suspicions. They pride themselves on saving, per 100 cases, to the tune 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 big savings

The £3bn is largely claimed on car insurance policies; the most suspicious are fire damage claims and unusual travel and housing claims. Ultimately, dishonest claim filing directly affects all policyholders and their premiums go up.

Lately, insurers relied on the covert use of lie detectors when dealing with phone 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 customer, which is great if they’re genuine. It’s also great if they’re not,” said Gabrielle Ashley, founder of ACM with Bill Truemen, a former Lloyds TSB and Direct Line fraud specialist.

The first step is to compile a written ‘blank version’ of the case from a phone conversation with the claimant from the time they discovered the problem until they contacted their insurers. They then ask questions and test various points to get different perspectives. Mrs. Ashley said. “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 that you’re using.”

Claim denial decisions have only had a 1% appeal rate and no one has taken them to the insured advocate or to court despite handling over 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 manual and technology-based controls. As part of this, they seek to balance the twin goals of improving fraud savings with minimal impact on their genuine customers in terms of delays or other inconvenience.