Cognitive Interviewing Cracks Fraudulent Claims

It is accepted that insurance fraud goes on even though it is an illegal practice. Is it seen as vengeance against insurers’ ever increasing premiums, but who try hard to avoid paying out on claims when they come. Insurance fraud is a problem and costs an estimated £3 billion annually. The festive season is notoriously bad – in the New Year claims rise by 40% as the over-spending at Christmas catches up.

The industry is not taking it any more, and, has introduced techniques developed by the United States police called ‘Cognitive Interviewing’. It is used to expose lies of insurance cheats whom are unaware they are being questioned.

A UK company based in East Grinstead, West Sussex, is pioneering the technique and they have on board many top insurance companies. When their researchers communicate with claimants they act as if they are the insurers so as not to raise suspicions. They pride themselves in saving, for every 100 cases, a sum of £37,000 and as we know, fraudulent claims are worth a lot of money each year – 15% of all favourable claims, so if the whole industry used this technique they could make huge savings.

The £3bn is largely claimed on motor insurance policies; most suspicious are fire damage claims, and unusual travel and homes claims. Ultimately, the submitting of dishonest claims directly effects all policy holders and their premiums go up.

Latterly, insurers relied on the covert use of lie detectors when dealing with telephone claims but also worried that stringent questioning might, in fact, offend the ordinary customers. At the company in East Grinstead, they use psychological techniques as part of general conversations. “We build up a rapport with the customer, which is great if they are genuine. It is also good if they are not,” said Gabrielle Ashley, founder of ACM with Bill Truemen, an ex fraud specialist at Lloyds TSB and Direct Line.

The first step is to compile a written ‘virgin version’ of the case from a telephone conversation with the claimant from the second they discovered the problem up to contacting their insurers. Then they ask questions and probe various points to get different perspectives. Ms Ashley said. “If you are telling the truth, it comes from the filing cabinet left side of your brain. If you are lying, it comes from the right side, and you change your language and the tenses you are using,”

Decisions to reject claims have only had a 1% appeal rate and no-one has taken them to the insurance ombudsman or to court despite having dealt with over 3,500 cases.

Other insurance companies are developing their own versions of cognitive interviewing. But some companies remain sceptical about these methods. Norwich Union does not consider any one fraud detection system in isolation to be a ‘silver bullet’. They adopt a layered approach, combining a framework of manual and technology-based controls. As part of this, they seek to balance the twin goals of enhanced fraud savings with minimum impact on their genuine customers in terms of delay or other inconvenience.