Although many of us are not professional criminals, it is more likely that we’ll inflate the insurance claims after an insurance company has rejected our claims. A new study in the Netherlands has found that when people are unhappy about their claim being rejected, they retaliate by committing fraud.

The study used mock insurance claim scenarios and the researchers found that people are quick to fudge their stories to get their claims settled after their claims were initially rejected. While the perpetrator may see the odd small claim inflation as harmless (the insurance companies have lots of money don’t they?), insurance fraud is a very expensive crime. In the US insurance fraud amounts to $400-$700 per family per year or around $40bn per year. These figures were released by the FBI and it does not include fraud that has not been discovered.

Dr Sophie Van Der Zee, the lead researcher on the study notes that fraud harms the bulk of a population while it benefits only a few people. Widespread fraud is costing society and thus each individual huge sums of money. Large savings can be achieved for both the insurance firm and the consumer if we understand what drives people to fabricate information on their insurance claims. Van Der Zee thinks they have the answer – transparency and clarity on the part of the insurer. Make the guidelines clear, and make the rejection policy even clearer.

The study consisted of participants using an online platform to fill out and submit mock insurance claims. The claims were either rejected or accepted by the researchers. Participants then reported on their levels of frustration, anxiety, guilt, happiness and sadness. Researchers looked at how rejection affected the participants’ emotions and subsequent behavior.

Many negative emotions were reported by people whose claims were rejected. It was significantly more likely that these people would lie or cheat in the next phase of the study. It was also found that the likelihood of them cheating was not related to whether or not there was a financial incentive or even whether the rejection was made on objective or subjective grounds.

Detection of deceit and fraud is very difficult, Van Der Zee said. Once we understand why people tend to commit fraud and behave dishonestly, we will be able to construct the situation in a way that people are stimulated to behave honestly rather than deviously. She concludes that prevention is always better than cure.

After two and a half years of research, the researchers are in talks with several Dutch insurance companies, exploring the possibilities of testing their ideas in the real world.

This new study has been published in Frontiers in Psychology.