25 September 2019 09:19
Behavioural economics can come to the rescue of insurers to reduce fraud cases ? Without a shadow of a doubt, ” says the reinsurer to Swiss Re in the most recent edition of its publication, Economic Insights.
Its subject matter experts remind us that behavioural economics incorporates the learnings of psychology to explain human decision making. It pays particular attention to the irrationalities that there was in this behavior.
The insurers have appealed to behavioral economics to improve their sales process and reduce the rate of revocation of their contracts. It could, however, allow them to go a step further to detect insurance fraud, say analysts at Swiss Re.
80 G$ per year… in the United States
These indicate that the insurers were mainly concentrated to detect the cases of fraud using advanced analytics. He could be just as important as it tackles understanding the behaviour of fraudsters in the insurance, say analysts at Swiss Re. They cite also the Coalition Against Insurance Fraud, which estimated that the cost of insurance fraud every year exceeds the $ 80 billion dollars in the United States.
In addition, the perception of people who defraud their insurance could be easily changed, they argue. They identified three main behaviours.
There are first those who are doing what the others are doing. If a neighbor or a friend fraud insurance, why not them ?
Then there are those who inflate the cost of their claims, saying that their property is worth more than what they cost really. Then come those who feel aggrieved in the processing of their claims and who believe that it should go to seek a specific dollar amount.
Be honest from the beginning
Swiss Re advises insurers to take the declaration as to the value of what they provide to the people prior to the claim. If people identify themselves as being honest from the start, there’s a good chance that they maintain this image of them throughout the process.
Offer a choice of response to the insured is another avenue, they argue. They give the example of a study carried out in 2008 from insurers. Those who had asked their clients whether they smoked daily, weekly or monthly basis had noted an increase in the disclosure of 3 % in the number of smokers. On the contrary, those who had simply asked if they were smokers or not.
“The insurers can influence the behavior of customers and away from the temptation to defraud. Explain to people that the claim that is paid comes from a large group of holder of insurance policies can discourage them from trying to claim fraudulently. They will thus realise that their actions have an impact on other people, especially the fact that you pay more for their insurance coverage, ” explain the experts of Swiss Re.