The effect of cultural tightness–looseness on fraud perception in insurance services

The purpose of this paper is to investigate how cultural tightness may influence consumers’ attitudes toward insurance services and occurrence of insurance fraud.

Drawing on Gelfand et al.’s (2011) theory of tight and loose cultures, the authors theorize that perceived wrongness of insurance fraud, fraud occurrence and perceived risk of being caught depend on the cultural tightness. Using field data from a global European social survey (ESS), the authors investigate these differences across two fairly different European countries – Norway (i.e. tight culture) and Ukraine (i.e. loose culture).

Consumers from tight culture report less tolerance for insurance fraud (inflating insurance claim) are less likely to commit an insurance fraud, and they perceive higher level of risk of being caught than their counterparts from loose culture (Ukraine).

Understanding cultural variability in attitude toward insurance fraud, the occurrence of insurance fraud and the sensitivity to the risk of being caught could enrich the authors knowledge about how to prevent insurance fraud.

Consumer protection agencies, consumer educators and policymakers could all benefit from understanding cultural variability in attitude toward fraud. This will potentially help to design effective learning and education programs to sensitize customers to the illegal and unethical aspects of fraudulent behaviors.

Insurance fraud is a universal issue and exists in many European countries, yet no previous work has investigated the effect of cultural tightness–looseness on fraud perception.