Honesty call at top of form could save £100 million, researchers say

Consumer Intelligence chief executive Ian Hughes

Insurers could save nearly £100 million a year on fraudulent claims by asking customers to be honest earlier on, a market research firm has said.

The reduction could be achieved by redesigning claims forms so customers are asked to state that their answers will be honest at the beginning rather than at the end of the form, according to Consumer Intelligence.

In the report Honesty: What makes consumers lie and how to make them tell the truth, the company said lying among insurance customers fell by 9.5% when they were asked to be honest before they supplied information.

The study, which involved controlled experiments based on behavioural psychology, also found that people lied more on average to insurance companies than in other situations.

Consumer Intelligence chief executive Ian Hughes said:  “Asking consumers to be honest drastically reduces dishonesty. 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 behavioural psychology in their favour. That can include reminding people of the 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. 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.”

Hughes said insurers should also think carefully about complaining about fraud publicly as it could  encourage people to put in false claims.

“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,” he said.

Fraud is estimated to cost about £1bn a year to the insurance industry and £50 to every customer in higher premiums.