Despite the clear and universal disadvantages that insurance fraud brings, it is now more of an issue than ever. Is it just due to the economic downtime and the unpopularity of insurance or do we need to establish a new social conscience for this issue?
The plight, if allegedly confessed guilt can be called that, of Brazilgate pair; Shanti Andrews and Rebecca Turner, has brought forth some interesting perspectives on insurance fraud. In this instance, the pair were accused and confessed to over egging their losses for a travel insurance claim, which didn’t please the local police when it is alleged some of the property was found in their possession.
Reaction and coverage in the UK has seemingly been strong, with a relation arguing that the measures taken to prosecute the pair were disproportionate to the offense.
Whilst we could never underestimate the harsh conditions of a Brazilian jail for two young women and the trauma it would cause, it is worth relating this unfortunate case study to the attitude that exists toward insurance fraud in the UK.
The plain fact is that fraud and dishonesty is culturally criminal in our country.
Do Britons care about insurance fraud?
A recent article in ‘The Journal’; the Chartered institute of Insurances’ member publication, takes the stance that most folk in the UK might consider 'congratulating' anyone that managed to eek a little more claim out of their loss. Whether they are talking about it over a three course meal or some fast food.
The UK public are notoriously quick to support measures against those that break rules; we are after all, a queuing nation. When one queues; one expects others to do so and the same attitude naturally applies to law abidance, lest a grumble be generated. Rightfully so (he cheers whilst sipping some tea).
Unfortunately and much to our detriment; insurance seems to have slipped through the social norms net when it comes to the 'honesty expectation'.
It isn’t “them and us” its “you and me”!
It is this humble insurance retailers opinion that there might be a little bit of “them and us” involved. Insurance is intangible, we constantly write about the need for consumer perspective to be focused upon the investment rather than cost of insurance. As cost alone could damage a consumer's perceived 'value' of insurance.
Consumers might see insurers as companies that take money for nothing most of the time. Ironically the opposite is true; on the whole, key products such as Car insurance are known to have poor claims results for a large number of providers.
Not claiming on a policy is actually a good thing, when you think about it. Would you feel worse if you hadn’t got home insurance and your house had burned to the foundations?
It is still explicable that an “it won’t happen to me” consumer mindset might overlook fraudulent claims, if not wholly logical.
The severity of fraud in terms of insurance claims, just does not stick for most. For many it’s not that big of a deal; of 3000 up to 44% cited that they viewed inflated claims as acceptable/borderline in a recent ABI (Association of British Insurers) survey.
The worrying thing about this attitude is that it completely goes against the very reason for insurance, that lack of certainty about of future outcomes and the risks we face.
Insurance is based on the concept of the common pool; those variables that affect one, affect all. It is estimate that insurance fraud adds £44 pounds to every general insurance policy sold+. Insurers base consumer premium on the total amount of claims (amongst other things) they expect to pay.
The more falsely inflated the claims: the more premium all consumers pay.
Insurance needs to get serious!
Perhaps some of the problem is the messages that our peers and major insurance brands send out. It is our passionate belief that insurance is a complicated product that requires straightforward but serious methods of retail.
It seems that too many products are sold by advertisements with quirky brand ambassadors or messages purely based on price. This is not an approach that creates respectability, there is of course that old adage that; “we treat others as we wish to be treated”.
If you put a cartoon character on TV and talk about money alone, then surely a consumer is less likely to take your offering seriously and focus wholly on the prices they pay. Price is of course very important, but it pales compared to the importance of consumer knowledge.
Would we ever see a major bank marketing 0% credit cards on TV with a man dressed in an 18th century soldiers uniform?
Insurance needs a better ‘rep’
Banking is just as complex for consumers, yet none of the major high street banks sell by “dumbing down”. Only one had a memorable or quirky brand ambassador and that person was a former branch manager.
If you have been reading the papers recently, a couple were given a very serious suspended sentence for taking over £60,000 out of a faulty cash machine. The penalty was high and publicised, as Banks send out the message that they punish accordingly. Relate this to insurance fraud...
Really, it is insurance brands that have a lot of work to do. We need to help consumers understand how our products work, educate children from middle school level to engage and even join the sector. Perhaps then the attitude toward this sector and those that jeopardise the community of risk sharing, might be viewed in a different light.
Of course we have our concerns for the welfare of two British citizens in Brazil, foreign laws can be harsh.
We must side with right however, it is not legal to undertake insurance fraud in the UK either, would you turn a blind eye?
James*
Marketing & Branding
+Source: Kevin Pratt: The Journal, Chartered Institute of Insurance August/September 2009
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