Claims outsourcing provider New Alphabet is in talks with Digilog to develop an automated claims system incorporating fraud detection.

New Alphabet claimed that the system could reduce claims costs by up to 34%.

The system would have the capability of checking claims against fraud databases for multiple claims or against lists of stolen items, said the company.

It would also allow policyholders to make voice claims on an automated recording system, which would then pass through the Digilog voice stress analysis process.

The company said that customers could follow their claims through the process, before logging their claims online.

According to New Alphabet chief executive James Hyslop, the entire claims notification process can be automated.

He said: "You will always need human intervention, but in many cases this can be left until the end when the claim is being settled or declined."

Hyslop also claimed his operation could achieve savings through fraud detection and by buying electrical goods in bulk.

The New Alphabet system is currently designed to deal with claims for electrical items such as brown and white goods, photographic equipment, computers and power tools.

Hyslop said: "Claims are not all about item replacement, they can also result in a cash settlement.

"However on the automated system we can show customers what they will be getting through our database of electrical goods."