Customer Service versus Fraud Management

Ooops! Accidents will happen but sometimes they may not be what they seem.

Price and customer service have always been the two biggest influencers behind the purchase of insurance, and insurance companies are seeing this trend increase significantly. This is partly as a result of current tough economic conditions and partly from the emergence and availability of new distribution channels for customers.

Insurance companies can offer very little by way of flexibility on pricing structures, and the provision of enhanced or better customer service is an issue facing increased scrutiny in the boardroom.

Also, insurers are facing an ongoing battle against insurance fraud - an issue that according to the ABI, costs the industry $1.6bn a year.

The need to provide policyholders with an efficient and positive claims experience, as well as managing fraud effectively, has proved to be a big challenge for the industry in recent years as fraud increases and fraudsters become more sophisticated.

Forensic Psychology
Since the introduction of forensic psychology to the insurance market in 2001, the adoption of 'cognitive interviewing' has grown rapidly as a means of detecting honesty and combating fraud in a more empathetic way. Perhaps its success is not surprising because this is a common sense approach to comfortably extracting information, which complements the service delivered to the genuine policyholder.

Cognitive Interviewing
Cognitive interviewing is a system which incorporates a number of key components. Since 2001, when it was introduced into the insurance industry, cognitive interviewing has been further refined.

Today, it draws on advanced forensic psychology, behavioural psychology, advanced conversation management, communication techniques and experience, in identifying and anticipating fraud trends.

Rapid Detection of Honesty
The key is to identify honesty rapidly, and fast tack genuine claims through to settlement whilst simultaneously pinpointing fraud and extracting the evidence to robustly repudiate such claims.

The methodology has also evolved to cater for, and manage, claim volumes with no loss of service or fraud identification. Commercial advantage can consequently be realised in terms of cost and the ability to ramp up the service as required. This is a real bonus.

FSA Regulations
As well as helping to enhance the customer service experience during the claims process, cognitive interviewing can also play an intrinsic role in supporting FSA regulations and TCF guidelines.

The methodology of obtaining information at the outset of a claim rather than weeks or months down the line when it has been flagged as high risk, is a natural complement to best practice and TCF guidelines. The cognitive process leads to early decisions with no need to keep referring back to various parties for additional information.

The industry as a whole recognises that working collaboratively is vital to combating fraud, yet historically there has been a deep mistrust between brokers and insurers in handling suspected fraudulent claims.

BIBA Survey
In last year's BIBA survey, it was reported that insurers tend to bypass brokers when dealing with suspicious claims because they feel they are obstructive when it comes to identifying fraudulent policyholders. Brokers, meanwhile, have concerns about the impact of fraud investigations on policyholders' customer service aligned to the claims experience.

Fraud Detection Tool
Forensic psychology as a fraud detection tool can help brokers and insurers to work together in collaboration throughout this sensitive process. Cognitive interviewing meets the needs of both insurer and broker alike, enabling a joined up approach which drastically reduces claims spend in relation to fraud whilst simultaneously delivering strong customer service to policyholders.

Protecting the Bottom Line
This joined up approach shields genuine policyholders from the additional costs of fraud, supporting FSA guidelines, whilst at the same time protecting the bottom line of both broker and insurer businesses. Policyholders value the fact that they are being protected from unnecessarily high premiums through the proactive pursuit of fraud and the swift resolution of genuine claims is a powerful reputation booster.

The significance for insurers of adopting empathetic methods of fraud management that will impact positively on both customer service and the bottom line cannot be overestimated and
this is a trend that is definitely here to stay.

On of the more popular versions of this Fraud Detection system is Absolute's Flatline