Insurance fraud is rapidly rising. But firms still have ways to beat it.

Rob Schumacher, Co-Founder and CEO at Feather

Insurance fraud is shooting up. The Association of British Insurers revealed £1.16 billion of fraudulent general insurance claims were identified in 2024 with insurers uncovering almost 100,000 fraud-related claims – a 12% rise from the previous year. As AI deepfakes and new, sophisticated technology change the fraud landscape still further, insurance companies have a hefty battle on their hands.

The challenges may loom large but insurance firms aren’t powerless. New technology is also helping businesses become more strategic in their fraud detection and response, allowing them to spot crime at unprecedented specificity and scale. The rise in fraud shouldn’t mean firms give in to defeatism: it’s a rallying call to redouble efforts and try a new approach.

Fraud: an attractive and growing crime

Insurance fraud is on the rise. With the cost-of-living crisis draining people’s bank accounts and a bleak and brutal jobs market, attempting to ‘play’ insurers and get money via fraud has become an increasingly attractive option. Additionally, fraud is often falsely viewed as a ‘victimless’ crime with a lower ethical barrier to entry: recent research has found that nearly one in two (48%) UK adults believe it is ‘reasonable’ to commit first party fraud.

But the surge in fraud goes far beyond one-off opportunities. Powered by the proliferation of sophisticated technology and the growth of AI, insurance fraud is now a fully fledged industry, creating deepfake documents and synthetic identities with ease, and even leveraging bot-driven fraud networks to drive crime. Synthetic voice fraud attacks on insurance companies jumped up 475% in 2024 and the practice of ‘ghost broking’ is earning criminals thousands, while defrauding vulnerable young motorists.

It’s not just the sophistication and complexity of insurance fraud schemes that’s worrying. Perhaps the most frightening aspect of the rise of insurance fraud is its accessibility. Tools to scam insurers are available on Telegram in a matter of minutes, so anyone can try their hand at financial crime.

The use of AI in the fight against insurance fraud

What we’re now seeing in insurance is a technological arms race with criminals and insurers rushing to adopt the latest tools to outsmart the other. Insurers can unlock real power here: as much as sophisticated technology can help criminals create more convincing schemes, it can also be used to fight back. Artificial intelligence and predictive analytics have become non-negotiables for insurers in flagging suspicious claims, with businesses using AI tools to continuously scan for anomalies across claims data, user behaviour, and document structures. Such tools can spot subtle patterns in seconds that humans may miss in hours, freeing up time for insurance investigators to focus more fully on complex cases. We’re already beginning to see the results: in September it was revealed that a new artificial intelligence tool had helped the UK government recover almost £500m over the last year.

The human touch is still essential

This isn’t making the argument that all counter-fraud activities should be passed over to AI. Insurers will combat fraud by combining emerging tools with human effort. Even the most advanced models currently need a helping hand analysing the behavioural red flags, emotional cues in writing, and timing mismatches that all come together to tell the story of a claim. Ethics, oversight, and context remain crucial with any AI use and these processes must be overseen by humans, who should be looped in continually in AI-led evaluations.

This means businesses must ensure they’re comprehensively training employees, both in effectively using these new tools and in spotting issues for themselves. Employees should be confident they can identify red flags, inconsistent documentation, or excessive claims, bringing their own skills and judgement to fully assess a claim.

Insurance fraud may be rapidly multiplying but firms haven’t lost the battle yet. Artificial intelligence doesn’t just do the work of criminals and, with the right solutions and strategies, insurers can use AI tech to fight back at fraudsters. A combination of sophisticated new tools and an informed employee strategy can allow insurance firms to gain the upper hand.