The P/C insurance industry stands at a critical inflection point. Customer expectations, reshaped by their seamless digital experiences with companies like Amazon and Apple, are pushing insurers to transform quickly.
With claims now a decisive factor in customer satisfaction, companies are racing to deliver effortless self-service and digital access. Cloud platforms, AI-powered automation, and digital workflows are no longer differentiators; they’re table stakes. Yet amid this wave of innovation, one powerful factor remains largely untapped: behavioral science.
While most claims transformation efforts focus on technology, behavioral science puts the spotlight on people. It helps insurers understand why policyholders behave the way they do when filing a claim, what drives satisfaction or frustration, and how seemingly minor tweaks to process design can lead to major gains in efficiency, trust, and outcomes.
This article explores how behavioral science principles can directly impact the customer journey in claims. Specifically, we’ll examine two key applications: improving digital claims experiences and reducing fraud through behavioral interventions. We’ll also highlight real-world insurer case studies that demonstrate how these principles are already driving measurable results across the industry.
Understanding the Principles That Drive Behavior
Traditional economics assumes people make rational decisions. Behavioral science, however, reveals a different truth: humans are predictably irrational. We often rely on mental shortcuts, emotions, and social cues more than we realize, especially in what we consider stressful or uncertain situations, such as filing an insurance claim.
Several core behavioral science principles are particularly relevant to the claims process:
- Loss aversion: Individuals fear losses more intensely than they value equivalent gains. This helps explain why some policyholders stick with familiar, traditional claims processes, even when digital alternatives are faster, easier, and more transparent.
- Cognitive biases: People often interpret information in ways that favor their own interests. For example, a homeowner might misremember the condition of their roof before a storm, resulting in claims that deviate from objective records or evidence.
- Behavioral nudges: These are subtle design interventions that guide people toward better decisions without restricting their freedom of choice. In claims, this could mean promoting the benefits of digital claims, using default settings, progress bars, or streamlined digital forms to encourage completion and reduce friction.
- Social norms: People are heavily influenced by what they perceive as typical or expected behavior. Highlighting how “most policyholders” act, such as using digital tools or reporting claims honestly, can encourage others to follow suit through peer-based reassurance.
Applying Behavioral Science to Digital Claims Experiences
The shift to digital self-service claims has accelerated, but adoption isn’t universal. Many policyholders still prefer human adjusters, as most only experience a claim once every 7 to 10 years. Behavioral science provides a roadmap for bridging this gap.
Reducing cognitive load is one of the most effective ways to improve digital journeys. Cognitive Load Theory suggests that people can only absorb a limited amount of information at once. A cluttered interface, too many choices, or unclear next steps can overwhelm users. Simplifying the user experience, using consumer-friendly terms, maximizing the use of pre-filled data, paring down optional fields, and highlighting the most relevant information can dramatically improve digital claims completion rates.
Overcoming loss aversion and status quo bias is also crucial. Policyholders may default to traditional processes not because they’re better, but because they’re familiar. Insurers can counter this by clearly communicating the benefits of digital channels: speed, transparency, and convenience. Providing side-by-side comparisons or testimonials from satisfied digital users can help change personal perceptions.
Behavioral nudges play a powerful role in guiding users. For example:
- Progress bars reduce anxiety and motivate users to complete tasks.
- Pre-selected defaults (e.g., “opt into digital updates”) simplify decision-making.
- Personalized reminders and real-time updates build confidence and reduce drop-off.
Social proof is another lever. Statements like “82% of policyholders resolve claims faster with our app” build trust in the digital experience and reinforce its value.
Fighting Fraud with Psychology
Rather than focusing solely on post-claim detection, behavioral science can help insurers deter fraud from the outset by influencing customer behavior during the claims process.
One technique is honesty priming. This involves placing honesty affirmations at the beginning of a claims process rather than the end. Studies show that when people commit to being truthful upfront, they’re less likely to exaggerate or falsify information later. This simple intervention has been linked to meaningful reductions in dishonest reporting.
Emphasizing the perceived certainty of detection can deter fraud. Many opportunistic fraudsters believe they can outsmart the system. Reminding users that AI tools, satellite imagery, or historical records will be reviewed sends a strong signal: fraud is likely to be caught.
Framing messages around loss aversion and social responsibility can further reduce fraud. For example: “False claims drive up costs for everyone.”
By appealing to a sense of fairness and community, insurers can make fraud seem socially and morally unacceptable, without alienating honest claimants.
Real-World Applications: Insurers Leading the Way
Some insurers are already embedding behavioral science into their claims strategies, and seeing strong results.
One global insurer created a Behavioral Research Unit to weave behavioral insights throughout its operations. The unit runs experiments, refines messaging, and designs customer journeys that reflect how people actually think and act. In their claims operations, this has led to faster resolution times and higher satisfaction scores.
Another U.S.-based insurer known for its digital-first approach employs behavioral scientists to continuously improve its platforms. They’ve applied nudging techniques to motor claims, using prompts and default options to reduce unnecessary calls and guide customers through self-service tools. The result: a measurable drop in claims costs, nearly 2% in certain product lines.
Another carrier applied social proof and framing to boost digital claims adoption. After updating onboarding screens to highlight the success rate and satisfaction of users who opted for app-based claims, usage of digital channels increased by over 25% within a quarter.
Even fraud detection has seen improvements. One insurer tested honesty priming across multiple regions. While impact varied by market, they consistently saw a reduction in small-claims exaggeration, a notoriously difficult type of fraud to catch with algorithms alone.
These brief case studies show that behavioral science isn’t just theory. It’s an underutilized competitive advantage that, when paired with technology, can make claims faster, cheaper, and more human.
The Future of Claims: Technology and Psychology
Claims transformation isn’t just a tech challenge. It’s a human one. Consumers don’t go through formal training to file a claim the way employees do. They rely on instinct, emotion, and habit. If insurers want digital tools to succeed, they must be designed around real human behavior. Behavioral science offers insurers a framework to:
- Increase digital engagement.
- Reduce abandonment of digital claims.
- Build greater trust in self-service channels.
- Detect and deter fraud without confrontation.
- Improve customer satisfaction and retention.
The most innovative insurers already see the writing on the wall: success in tomorrow’s claims environment will go to those who invest in both smart systems and smart psychology.
It’s time to stop thinking of behavioral science as an academic concept and start using it as a lever for digital transformation.
Topics
Claims