AI Opens New Opportunities for Bad Actors...and New Ways to Thwart Them
Artificial intelligence is reshaping countless industries, and insurance is no exception. Most of the time, these tools are used to speed up claims, improve customer service and reduce paperwork.
But there’s another side to the story: some people are misusing AI to attempt insurance fraud. It’s not new for fraudsters to look for loopholes, but the technology they’re experimenting with now is far more sophisticated than anything we’ve seen before.
And it's on the rise. One insurer noted a 300% increase in incidents where apps were used to manipulate real-life images, videos, and documents.[1]
Even so, the truth is simple: AI may help someone create a fake image or fabricated voice, but insurers are using even stronger AI to detect those very tricks. That means while the tools have changed, fraud still ends up where it always does: exposed. By 2026, 83% of insurance fraud analysts expect to use generative AI in their work.[1]
Deepfake Photos and Videos
One of the fastest-growing problems is the rise of AI-generated photos and videos. Anyone with a smartphone and an app can now inflate damage or create damage that never existed.
The Fraud:
A simple example is a fake photo of a car accident. Instead of dragging a damaged vehicle into a mechanic’s bay, someone can use generative image tools to produce a convincing dent or shattered bumper.
The same is happening with homeowners' claims. People attempt to submit AI-generated damage, such as roof leaks, broken windows, or fire damage.
Voice Spoofing and Fake Calls
Another trend is voice cloning, and it's definitely on the rise. One study found that insurance fraud from synthetic voice attacks increased by 19% in 2024.[2] Someone records a brief audio sample of a policyholder, feeds it into a cloning tool, and uses the generated voice to call an insurer.
Synthetic Identities
So far, we've looked at ways AI can enhance or alter real people and events; however, this one takes things a step further, inventing a new identity. Synthetic identity fraud is another emerging problem where someone combines real and fake information to create a believable customer profile.
Why AI Fraud Fails
The heart of the issue is that every AI tool available to the public also exists, often in a stronger form, in the investigative departments of insurance carriers. Fraud detection systems don’t just look at a single photo or document. They look at patterns across thousands of claims, internal databases and historical precedents.
A fraudster might think a generative image looks good, but the system reviewing it isn’t judging it the way a person would. It's judging it through math.
Most attempts are caught before payment is ever issued. Even legitimate claimants can get flagged when something innocent looks strange, which shows how tight the detection nets have become. Fraud cases that do slip through are usually uncovered later during audits or subrogation reviews, leading to serious consequences: repayment, permanent claim denial, higher premiums or even criminal charges.
The Real Cost of Fraud
It’s also worth remembering that fraud doesn’t just hurt the insurer. It affects you as a policyholder across the board. When fraudulent payouts rise, premiums increase to cover the difference.
Legitimate claims get delayed because investigators have to sort through suspicious ones. Customer service suffers when resources are tied up chasing fabricated stories rather than helping people who genuinely need assistance.
Fraud is tempting for people who believe it’s a victimless shortcut. But it’s not victimless at all. Insurance relies on shared risk. When someone cheats, everyone absorbs the cost.
Wrapping Up
AI is going to keep evolving, and so will the people who try to misuse it. But the detection systems are evolving even faster. Insurance companies are using machine learning, digital forensics, and behavioral analytics that the average fraudster doesn’t even know exist. The idea that “no one will notice” is more outdated than ever.
In reality, AI hasn’t made fraud easier. It has made it easier to catch.
And the people who rely on these tricks eventually learn what investigators already know: fraud isn’t clever, it’s predictable. And in the age of artificial intelligence, it’s nearly impossible to hide.