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Changing Claims Forms Could Cut Insurance Fraud

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Market research company Consumer Intelligence has found that asking insurance customers at the beginning to state the answers on their claims form will be more honest in comparison to asking at the end of the form. This is something that could cut nearly £100m off the £1bn a year cost for fraudulent claims. Fraud is estimated to cost every insurance customer around £50 a year as the companies increase their premiums, which can add up to a total cost of around £1bn. The report titled “Honesty: What makes consumers lie and how to make them tell the truth” used some behavioral psychology theory and then consumer research in order to demonstrate how insurers can improve their service to customers and end the inaccurate or dishonest claims.

In controlled experiments with insurance customers, Consumer Intelligence found that people lied more to their insurers than on average but that the dishonesty fell by 9.5 percent when these people were asked to be honest before they provided the information. An Hughes of Consumer Intelligence said: "Asking consumers to be honest drastically reduces dishonesty and the simple and powerful lesson for insurers is that it is a way to reduce fraud and ultimately premiums for customers." There are a number of quick and easy measures insurers can take to use behavioral psychology in their favor. That can include reminding people of their need to be honest and not asking questions that force them to be creative such as the exact value or measurement of a lost item. If people don't know they have to guess and once they start guessing it is hard to stop.”

The report highlighted that an area where people are more likely to display dishonesty is when they are declaring their annual mileage. Although someone may drive around 12,000 miles, they might only declare around 10,000 miles. They often think that if they start driving a little less than usual, they would be able to get away with the lie that they have told on their claims form. They have provided incorrect information, but not an extremely low answer because they want to make some sense of it true and not make it seem like it’s an obvious lie.

Hughes adds, "Consumers should be asked to indicate they will be honest at the beginning of a process to put them in the right mind-set before providing information. Insurers should also think carefully about complaining about fraud publicly - if they are talking about Britain being the whiplash capital of Europe some people will instinctively think that it is more acceptable to put a false whiplash claim in because so many other people are doing so." Ultimately, the study does show to some extent that if forms request for people to be honest, they will try their best to do so, implying that it’s not always part of the will to want to deceive insurers or be dishonest about something when it’s unnecessary.