Insurers battling fraud with investigative psychology

Insurance companies are using investigative psychology techniques to assess the credibility of home and motor insurance claims.

Innovation Group, which provides outsourced claims handling services to insurers including AXA, RSA, Aviva and Zurich, carried out 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.

Leal added 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 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.

Hampshire-based Innovation Group 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.