Insurer introduces psychological tests to prevent fraud

Insurance giant AIG has become the latest group to introduce psychological testing in a bid to cut down on fraudulent claims, it emerged today.

The US group, which operates in 130 countries, is piloting the system on motor and travel insurance claims that it believes may be fraudulent.

It has employed Absolute Customer Management, which uses an interview technique developed by criminal psychologists in the US and used in Holland by psychologists working with children, to look into any suspicious claims.

Staff at Absolute ask claimants to talk them through the claim, analysing the language they use, the level of detail they give and the emotions they display.

The group's centre in East Grinstead, West Sussex, looks into claims for 15 insurers and banks, including Fortis and esure. It handles around 400 claims a month with a collective value of ?1.5m, and estimates that 30% of the claims it looks into are potentially fraudulent.

An AIG spokeswoman said: "We are convinced that the vast majority of our policyholders are honest. We are evaluating this new method on less than 1% of the claims we receive."

Car insurer Admiral recently said the use of lie detectors had led to a quarter of policyholders withdrawing claims over vehicle theft.

Britain's biggest mortgage lender, HBOS, uses voice stress analysis technology to try to detect if people are lying when lodging claims under household insurance, while Highway Insurance a syndicate of Lloyds of London, has been using it to detect fraud on motor insurance claims for more than a year.

The Association of British Insurers estimates that fraud on motor and household insurance costs the industry more than ?1bn a year.