INSURANCE firm AIG has become the latest group to introduce psychological testing in a bid to reduce the number of fraudulent claims.

The US group, which operates in 130 countries, is piloting the system on motor and travel insurance claims it thinks 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 claims about which it has suspicions.

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 about 400 claims a month, with a collective value of £1.5m, and estimates that 30 per cent 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 one per cent of the claims we receive."

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

Britain's biggest mortgage lender HBoS uses voice stress analysis on callers lodging claims under household insurance, while Lloyds of London syndicate Highway Insurance 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.

* Two supermarket chains announced yesterday new insurance deals would go on sale to customers.

Asda, owned by Wal-Mart, plans to sell life insurance in its 265 stores. The group, which sells Scottish Widows life policies, had been piloting the cover in 40 stores.

Insurer Legal and General also announced a tie-up with Sainsbury's which will enable it to target the supermarket's 11 million customers.

The group will be selling Sainsbury's-branded life insurance policies, which can be taken out over the telephone without the need to take advice.