65% of insurance claims handlers have noticed a rise in fraudulent claims since the onset of the cost of living crisis.
The research, which was conducted with 200 claims handlers by Censuswide, and commissioned by InsurTech firm Sprout.ai, shows that AI and digital tools are being increasingly used to alter or create false claims documents.
According to the findings, 19% of those surveyed believe up to one in four claims now include fake supporting documents, manipulated using AI.
Overall, an overwhelming 94% of claims handlers suspect at least 5% of the claims they review are fraudulent. Additionally, 19% suspect AI and digital tools are involved in as much as 25% of cases, with 64% believing that AI plays a role in 5-10% of cases.
Fraudsters are focusing on lower-value claims as insurers struggle with the cost of manually reviewing every claim.
Many insurers auto-approve claims below a certain value, and 93% of claims handlers in the study believe this has led fraudsters to target claims worth less than £2,000.
Claims valued between £501 and £1,000 are seen as particularly vulnerable, with AI-generated or altered images, maps, medical reports, and valuation certificates increasingly being used in the fraud process.
The cost of living crisis, which began in 2021, is believed to be a significant factor in this surge of fraudulent activity. 65% of claims handlers have witnessed an increase in fraudulent claims, with 45% noting a slight rise, and 20% reporting a more significant increase.
Sprout.ai CEO Roi Amir commented on the findings, saying, “Insurance fraud costs the industry billions, and this latest data shows it is on an upwards trajectory. Fraud has profound economic and societal consequences, driving up costs and premiums for insurance customers. The use of readily available AI tools to create and edit supporting documents for insurance claims is prolific, an issue that insurers need to regain control of by fighting AI with AI. Powerful data processing tools, enabled by generative AI, can detect fraud by comparing the current claim against a vast database of imagery, documentation and existing claims data, flagging irregularities in real time.”
The report suggests that the availability of AI tools to the general public and the ongoing economic pressures have made fraud easier and more appealing.
To tackle this growing issue, the industry is being urged to adopt AI-driven solutions capable of detecting fraudulent claims in real time.
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