While the benefits of AI are being seen around the world daily, some of its more sinister uses could lead to everyone paying more for insurance.
Insurance fraud is nothing new, from exaggerated claims to staged “crash-for-cash” collisions which involve innocent third parties, often professional drivers in liveried vehicles. But today, AI is being used to inflate or even create entirely fictitious claims with the hope of an easy payout.
While some are the result of individuals being tempted to inflate the value of a claim or include items that were not damaged — something the police call opportunistic fraud — organised criminals are also targeting the insurance industry, which saw a 71% increase in fraudulent claims last year.
Hi-tech tools
Insurer Admiral told the BBC that, as well as claims for expensive luxury watches that didn’t exist and faked personal injury cases, AI-altered claims included fake number plates on vehicles, vehicle positions being changed, as well as artificially created damage.
The Insurance Fraud Bureau told the BBC it is “heavily concerned” and is investing in its own technology to tackle it.
Among the fraudulent claims detected and rejected by Admiral were exaggerated damage to the back of a car, and in another case, a number plate was changed and repositioned to duplicate a claim.
The IFB warns that as well as having their claim rejected, customers can have their policy cancelled and face prosecution for exaggerating or falsifying a claim.
John Davies, of the IFB, told the BBC: “The industry is heavily concerned about this and investing in technology.
“It is a fast-moving issue, but I think what is positive is the collaboration across the industry, the understanding that it is a threat, but also there are opportunities there in how we can share knowledge and best practice to help use AI in a positive way.”
Counting the cost
The cost of fraudulent claims is covered by everyone through increased insurance premiums. This means that through no fault of their own, and after another year of claims-free driving, professional drivers could see their taxi insurance and fleet insurance premiums go up.
The City of London Police are responsible for investigating insurance fraud and while they note the difference between opportunistic fraud and organised fraud, the result is the same — they are both crimes.
It warned: “Opportunistic fraud is typically carried out by individuals who see a chance to profit and take it — often believing it’s harmless or unlikely to be detected. But make no mistake: opportunistic fraud is a crime.
“Whether it’s inflating the value of a claim, inventing extra losses, or deliberately damaging your own property, these actions are fraudulent. They undermine the integrity of the insurance industry and increase premiums for honest policyholders.
“Every case is treated with the same level of scrutiny and determination. If you attempt to commit opportunistic fraud, you risk being investigated, prosecuted, and receiving a criminal record.”
While individuals and organised gangs believe they can use AI to make a false claim, for the police and IFB, no case is too small to investigate.
Finding frauds
The police added: “The Insurance Fraud Enforcement Department works closely with insurers across the UK to detect and investigate suspicious claims. Our collaborative approach means that even seemingly minor or one-off cases of fraud are likely to be identified and pursued.
“We use cutting-edge technology, data sharing, and expert analysis to uncover fraudulent activity, and we’re committed to holding offenders to account.”
While it might be tempting to use AI to exaggerate the value of a claim or to add damage to a vehicle that didn’t happen, the consequences of insurance fraud — especially for professional drivers — are severe.
As well as having a claim invalidated, they may be prosecuted, face huge fines and even go to prison. Not only would they lose their livelihood, they will find it difficult to obtain employment in the same field, and even have trouble getting insurance in future.
Insurance is a legal requirement to protect people and property. Those who try to abuse or misuse it will feel the full weight of the law come down on them.
