The study, which was commissioned by the insurtech company Sprout.ai and involved 200 claims handlers, demonstrates the growing usage of artificial intelligence (AI) and digital tools to fabricate or modify claims paperwork.

The results show that 19% of respondents think that up to 40% of claims now contain fictitious supporting documentation that has been artificial intelligence (AI) modified.

The vast majority of claims handlers—94%—believe that at least 5% of the claims they examine are fraudulent. Furthermore, 64% of respondents think AI is engaged in 5–10% of instances, while 19% believe AI and digital technologies are involved in as many as 25% of cases.

Since insurers are finding it increasingly expensive to personally evaluate each claim, fraudsters are concentrating on lower-value claims.

93% of claims handlers in the research feel that since many insurers automatically process claims below a specific threshold, fraudsters have turned their attention to claims under £2,000.

Claims worth between £501 and £1,000 are thought to be especially vulnerable, as the fraud process increasingly makes use of maps, valuation certificates, medical reports, and AI-generated or changed photographs.

This rise in fraud is thought to be mostly caused by the cost of living issue, which started in 2021. A majority of claims handlers—65%—have observed a spike in fraudulent claims. Of those, 45% have observed a marginal increase and 20% have observed a more notable one.

"Insurance fraud costs the industry billions, and this latest data shows it is on an upward trajectory," stated Roi Amir, CEO of Sprout.ai, in response to the results. Fraud raises insurance customers' expenses and premiums since it has significant negative effects on the economy and society. The widespread use of easily accessible AI tools to draft and modify supporting documentation for insurance claims is a problem that insurers must take back control of by competing with AI. By comparing the current claim against a vast database of images, paperwork, and previous claims data, powerful data processing algorithms made possible by generative AI are able to identify fraud and highlight abnormalities in real time.

According to the research, the public's access to AI technologies and the persistent economic constraints have rendered fraud more attractive and simpler to commit.

The industry is being pushed to embrace AI-driven solutions that can identify fraudulent claims in real time in order to address this expanding problem.