Bill Jackson could be the man who finally manages to put a stop to insurance fraud. The police veteran is the architect of an “intelligent security solution” that has had a dramatic effect on travellers' cheque fraud. Now he is turning his attentions to the insurance industry.
Jackson developed the Core screening system two years ago, while working with forensic psychologist Eric Shepherd at Thomas Cook Financial Services' travellers' cheque investigation unit. He had been head-hunted to the travel company after introducing the world's first civilian surveillance team in conventional policing and developing a training programme on managing informants.
After a year's work, Jackson and his team came up with a unique distance conversation management system, to be used on people reporting the theft or loss of travellers' cheques. In simple terms, it works by taking their account over the phone and carefully conducting the conversation in a manner that would highlight deceptive behaviour such as hesitation, difficulty on detail or contradiction, then asking pertinent questions. The story is then put on a timeline to reveal areas of weakness.
“Conversation management entails taking the claimant through a systematic process of listening, writing, probing and summary,” Jackson says.
“It's a staged process that has also been adopted by the police service for interviewing both witnesses and suspects.”
The results of the system were phenomenal. Thomas Cook's claims repudiation rate increased from 4% to 25%, and an annual saving of £4m was made in defensible claims denials. Also, there was no drop in customer satisfaction, because excellent service is a vital part of the system.
“Most amazingly, 50% of those claims denied were as a result of them being withdrawn shortly after the claimant met the first signs of resistance which, in many cases, was as simple as offering to help them progress their claim by taking a full account of the circumstances,” Jackson says.
“We need to talk to people, listen to what they say and be empathetic, give them the extra service and use that as a chance to look for things that are wrong.”
A sure success
Jackson was so certain the system could be used to stem insurance fraud that he left Thomas Cook to start VFM Services last September. He has further developed Core into a more commercially-focused system he calls Empathic Risk Assessment or New Era.
It works on the premise that customer service and fraud management are not mutually exclusive activities.
“It does involve keeping control of the conversation, but there is a mountain of difference in being firm and being adversarial. To help with critical areas of the conversation, the claim handler sometimes works from a script that has been specifically designed for the company,” Jackson says.
“The key ingredient throughout is quality customer care. This element is a major force in dealing with fraud because empathising with a claimant and actually helping them make their claim can seriously unnerve those with criminal intent.”
He says that it is not difficult to train call centre staff and claims handlers to employ the system.
“The system places a range of demands on the phone claims handlers, not least with regard to intent listening, questioning, memorising, and contemporaneous data capture in a visual format,” Jackson says.
“A main tenet of the process is the use of applied psychology techniques to give operatives an understanding of how to test the claimant's short-term working memory.
“This is based on the simple principle that the genuine claimants will have no difficulty recalling events or details about something that really happened, while, in contrast, the fraudster will stumble, then fall.”
Fraudsters will move on
Jackson says New Era could teach the insurance industry to look at fraud in a different way.
“Seeking prosecutions is sometimes necessary, but it's an expensive way of managing fraud in volume. It's much more efficient to place the right resistance in the way of fraudulent claimants,” he says.
“Only a very small percentage are persistent career fraudsters and next time they'll go to an easier target. If everyone in insurance uses the same methods, they'll move to a new, easier industry.”
At present the only suppliers of the such a system are VFM, Shepherd's Forensic Solutions and Crawford & Co. Crawford's Score system is based on Thomas Cook's Core, and is run by Jackson's former deputy Will Gaskell.
Jackson reports growing interest from the insurance industry in the system and says he is in talks with several major companies. He is working with McLarens Toplis, which is rolling it out across its system and helping Jackson take it to the insurance industry.
“A number of in-house pilots are already under way and have had notable success. They all intend to increase their commitment,” he says.
“I don't think there's any alternatives. The industry's been protected by its ability to pass on the loss to customers but that's not going to be accepted anymore.”