By Max Clarke
Insurance companies are using investigative psychology techniques to assess the credibility of home and motor insurance claims as they prepare to manage an expected rise in potential fraud as a result of the recession.
In a recent analysis of 900 suspect claims between August and November 2010, staff trained in investigative psychology confirmed 51% of the home claims and 47% of the motor claims as potential deception and resulted in no payout by the insurance company.
By contrast investigations that focus on detecting signs of nervousness and guilt are "wholly unreliable" and "no better than tossing a coin in the air," according to Dr Sharon Leal of University of Portsmouth, who is conducting the study. Dr Leal went on to say that even highly technical gadgets such as voice stress analysis machines are unlikely to perform better than chance, given that they focus on the same flawed concepts of deception.
"The cost of fraud to insurance companies and to their clients is approaching £2bn in the UK. On average, this adds £44 to each household's insurance policies," said Robert Thomson, UK Managing Director at Innovation Group. "It is in everyone's interest to bring that number down and clients are looking to service providers such as ourselves for help. Innovation Group is extending its counter-fraud business and making innovative use of investigative psychology in order to meet that demand. As a result, we can offer insurance companies a proven approach which delivers compelling return on investment."
After training in investigative psychology techniques to analyse claims as they are handled, some staff had a detection rate which was 94% accurate. The return on investment for Innovation Group's insurance company clients has been as high as 3,000% for motor theft claims and 400% for household policies.
The study was undertaken as part of Innovation Group's deployment of Criteria-Based Content Analysis (CBCA), a tool which is the core of a psychological process called Statement Validity Assessment (SVA). CBCA is an instrument used in criminal trials for assessing the validity of witness statements. The Hampshire-based company, which provides outsourced claims handling services to the insurance industry, has funded a £112,000 study by the Department of Psychology at the University of Portsmouth to investigate the application of CBCA in reducing fraud levels in motor insurance.
"Insurance fraud and fraud services have been in the shadows for too long. With this new set of counter- fraud services, clients get access to a skilled pool of specialists using a proven process which will handle suspect claims and deliver immediate savings. The approach we are using has been validated for its academic rigor and brings a new level of professionalism, repeatability and certainty of return to the handling of suspect claims," said Robert Thomson.
Innovation Group uses a three-step claims handling process which involves initial screening, desktop investigation and follow-up.
"This approach highlights suspect claims with a high degree of certainty and ensures resources are directed to those which need attention rather than chasing innocent policyholders and putting them through the inconvenience of an investigation," said James Harding, head of counter-fraud at Innovation Group.
According to Innovation Group, this approach ensures all clients are treated fairly. The CBCA process can also be set up in bespoke ways to respect an insurer's claims-handling philosophy and customer care ethos.
"There is a real need to use evidence-based methods that are scientifically proven to work and stop wasting insurance companies' time and money and to stop innocent people being treated as suspects while the guilty get away," said Dr Sharon Leal, research fellow in the department of psychology at University of Portsmouth.