Research from claims automation company Sprout.ai shows 65% of insurance claims handlers have noticed an increase in fraudulent claims since the cost of living crisis hit. Additionally, 19% of those surveyed suspect that up to 1 in 4 claims are now using fake supporting documents that have been created or altered using AI and digital tools.
The research, conducted by Censuswide, surveyed 200 claims handlers and found that 65% have noticed a rise in fraudulent claims since the onset of the cost of living crisis in 2021. Alarmingly, 19% of respondents estimate that up to 25% of claims now involve fake documents, such as AI-altered images, medical reports, and valuation certificates.
Overall, 94% of claims handlers suspect at least 5% of claims are being manipulated with AI. Many believe that fraudsters are focusing on smaller claims, as 93% of those surveyed noted that lower-value claims—typically under £2,000—are more likely to involve AI-generated or altered documents. Claims valued between £501 and £1,000 are particularly vulnerable to manipulation.
The study highlights the challenge faced by insurers in manually reviewing every claim, with many opting to auto-approve claims below a certain threshold. This practice, the survey suggests, has been exploited by fraudsters who leverage AI to create believable but fraudulent claims.
With the rising accessibility of AI tools and continued economic strain, the prevalence of fraud in the insurance industry is expected to remain a growing concern.
Commenting on the research and its findings, Roi Amir, CEO of Sprout.ai said: “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.”
He added: “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.”
