Enhancing Digital Claims with Behavioral Science

The P&C insurance industry isn’t exempt from the Amazon effect.

Tech is moving fast, and policyholders now expect the same smooth, user-friendly digital experiences they get from their favorite tech and e-commerce brands — especially when it comes to filing a claim. If they’re met with a slow, frustrating process, they’re more likely to walk away. And less likely to come back.

To stay competitive, insurers are investing in cloud-based systems and building specialized teams to rethink the customer experience. It’s promising, but one critical piece of the puzzle often gets overlooked — human behavior.

Behavioral science helps insurers understand what customers really want — how they think, how they choose, how they engage — while subliminally influencing their choices and behaviors. It’s especially powerful in digital claims, where the goal is to make the process easier, reduce fraud, and support better decisions. When those insights guide the design, it creates experiences that feel more natural, influence user decisions, build trust, and turn customers into loyal fans.

What is Behavioral Science?

Behavioral science looks at why and how people make decisions in the real world. It digs into the psychological, social, and emotional factors that shape behavior — like how our environment, emotions, or biases — influence the choices we make, even when they don’t seem rational.

Behavioral science looks at why and how people make decisions in the real world. It digs into the psychological, social, and emotional factors that shape behavior — like how our environment, emotions, or biases — influence the choices we make, even when they don’t seem rational. It also plays an active role in influencing decision-making, often without people realizing it, while still preserving a sense of choice. It’s about understanding the how and why behind behavior — and using that understanding to guide decisions in ways that benefit both the customer and the insurer.

Drawing from fields like psychology, economics, sociology, and neuroscience, behavioral science challenges the idea that people always act logically. Instead, it shows that our decisions are often influenced by cognitive biases, social pressures, and heuristics (mental shortcuts we use to make sense of complex decisions).

Key Principles of Behavioral Science

Traditional theories suggest that people always make rational decisions, but reality tells a different story. Think about waiting in a slow-moving grocery store line — we see another line move faster, yet we stay put out of sheer stubbornness or hope.¹

Behavioral science explores these very human tendencies. Key concepts include:

• Cognitive biases: Mental blind spots that throw off our judgment
• Behavioral nudges: Placing options that guide decisions without taking away choices
• Loss aversion: People tend to fear losing something more than they value gaining
• Social norms: The influence of what others are doing and what we think we’re expected to do

These ideas are at the heart of understanding biases and customer behavior. Through behavioral science, an insurer can subtly affect customer decisions—going beyond simply understanding how they think and act. By applying these principles, insurers can redesign claims experiences that align with how people actually make decisions, leading to better outcomes and more effective engagement throughout the claims process.

Take a homeowner filing a claim after a storm, for example. They might recall their roof being in "excellent condition" before the damage. This bias — called "misremembering" — isn’t usually intentional. Rather, it’s a natural tendency to interpret information in a way that benefits us. The trouble is it can result in customer disputes, delayed settlements, and even potential fraud if the damage is overstated.

We recommend insurers reduce this risk by using data-driven solutions, like displaying satellite images that verify the roof’s actual age and condition. They can also use default assessments that policyholders need to actively modify, helping keep claims closer to the facts.

Applying Behavioral Science in Digital Claims Processes

Behavioral science is a key factor in digital claims, helping make the process easier to use, more trustworthy, and more likely to be adopted. In our years of work with insurers, we’ve seen its principles used in small, informal ways, but taking a more intentional approach can lead to faster, smoother, and more customer-friendly claims experiences.

Cognitive Load Theory, for example, tells us that people can only process so much information at once.² That’s why it’s important to keep the user interface simple, prefill data where possible, cut down on choices, and prioritize what matters most. Less clutter means less confusion — and fewer people dropping out mid-claim.

Here are a few other ways we believe behavioral science can help:

• Loss aversion and status quo bias: Many customers are more comfortable with the traditional agent- or adjuster-led process simply because it feels familiar. By continuously reinforcing how digital claims are faster, more convenient, and offer greater transparency, insurers can help overcome that bias³
• Behavioral nudges: Simple nudges like progress bars, default options, or personalized updates can help guide customers through the claims process with less friction while still giving them a sense of control.⁴ These nudges are great for enhancing customer engagement and communication, selecting preferred service partners, making it easier for policyholders to complete claims with confidence
• Social proof: Messages like "most policyholders resolve claims 50% faster with self-service" can build trust in digital channels and help increase adoption
• Fraud detection: Behavioral insights can also help insurers flag inconsistencies without slowing down legitimate claims. That means faster resolutions for most customers and better control over costs

How Behavioral Science May Reduce Fraud in Insurance Claims

More and more customers are turning to digital claims. But as adoption grows, so does the risk of fraud. Behavioral science can help tackle this challenge by addressing the psychology behind dishonest behavior.

For example, some research suggests that “honesty priming” — or placing an honesty statement at the beginning of a process, rather than the end can significantly reduce fraudulent reporting.⁵ The idea is that once customers have already entered their information, they’re less likely to go back and change it, even if they see a warning at the end.

Honesty priming is widely seen as a low-cost, high-reward strategy. It won’t eliminate fraud entirely, but it can reduce opportunistic cases.

While controlled studies show positive results, the real-world impact of honesty priming often comes down to how it’s implemented. Some insurers report meaningful reductions in fraud, while others see more modest gains.

Still, honesty priming is widely seen as a low-cost, high-reward strategy. It won’t eliminate fraud entirely, but it can reduce opportunistic cases, like when someone exaggerates a claim, rather than making it up completely.

Other ways behavioral science can help prevent fraud include:

• Perceived certainty of detection: People who attempt fraud often believe they can outsmart the system. We recommend insurers counter that by highlighting the power of their AI fraud detection tools — and reminding customers that the process may include recorded statements and physical inspections
• Loss aversion framing: Letting customers know that fraud drives up premiums for everyone can tap into a sense of social responsibility, encouraging more honest choices and supporting the broader health and well-being of policyholders
• Behavioral nudges: Simple messages like “98% of policyholders report their claims honestly” can help create a culture of integrity

Real-World Examples of Behavioral Science in Action

Some big companies have successfully used behavioral science principles to improve their customer experience and guide people in the direction they want them to go.

For example:

• Amazon uses choice architecture, scarcity cues, and default bias to make purchasing decisions easier for customers. Features like one-click ordering, scarcity cues like “only 2 left in stock,” and saved payment details make checkout faster, simpler, and more compelling
• Netflix uses subtle nudges to keep people watching, like auto-playing the next episode and offering personalized recommendations based on what they’ve watched or liked before
• Apple relies on status quo bias by designing iPhones with default settings, like automatic cloud backups, so most people stick to the settings designed to work best for most users

These companies have quietly built behavioral science, combined with AI, into their systems, shaping user behavior in subtle but impactful ways which benefit both the consumer and the company.

Now, leading insurers are applying these same insights to enhance customer engagement and streamline claims processing:

• One global insurer set up a dedicated Behavioral Research Unit to embed behavioral insights across the insurance value chain, improving product design and claims experiences
• A U.S.-based insurer, known for its tech innovation brought behavioral economists onboard to help make its claim process simpler and more satisfying to customers
• Another insurer uses nudging techniques to improve motor claims service, leading to a 2% drop in claims costs

Together, these efforts show how behavioral science makes it easier for customers to move through their claims with clarity and confidence.

The Road Ahead: Transforming Claims with Behavioral Science

As the insurance industry shifts from traditional, employee-led claims to customer-driven models, there’s a steep learning curve. Unlike employees, customers don’t follow scripts or training. They act on their own, which makes it hard to guide behavior in consistent and reliable ways.

The cognitive logic behind AI can help guide better decision-making for both insurers and their customers.

The cognitive logic behind AI can help guide better decision-making for both insurers and their customers. But logic alone isn’t enough. That’s where behavioral science comes in — helping insurers understand how people think, where they get stuck, and how to design experiences that feel easier, faster, and more intuitive. Behavioral science is especially valuable because once insurers understand consumer behavior, they can begin to subtly influence choices and actions — while still giving consumers options.

The most forward-thinking insurers are already using these insights to improve the claims experience — simplifying digital interfaces, applying nudges, and reducing fraud. The result? Happier customers, fewer delays, and smoother claims.

References:

1. Samuelson, W., & Zeckhauser, R. (1988). Status Quo Bias in Decision Making. Journal of Risk and Uncertainty, 1, 7-59.
2. Sweller, J. (1988). "Cognitive Load During Problem Solving: Effects on Learning." Cognitive Science, 12(2), 257–285.
3. Agarwal, S., & Chatterjee, S. (2013). Behavioral Economics and Consumer Protection. Yale Journal on Regulation, 30(2), 383-430.
4. Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving Decisions About Health, Wealth, and Happiness. Penguin Books.
5. Shu, L. L., Mazar, N., Gino, F., Ariely, D., & Bazerman, M. H. (2012). Signing at the beginning makes ethics salient and decreases dishonest self-reports in comparison to signing at the end. Proceedings of the National Academy of Sciences, 109(38), 15197-15200.