How deepfakes, disinformation and AI amplify insurance fraud

Digital technology including AI can facilitate varied forms of criminal activity, including submission of fraudulent insurance claims. Insurers face heightened operational demands and costs to detect and mitigate the risks that deepfakes can bring. AI can also facilitate widespread disinformation that can erode trust in the insurance industry and impact legal proceedings.

Deepfake technology can create convincing but false evidence like altered video footage or doctored documents, making it more challenging for insurers to verify the authenticity of claims. Concurrent with rising numbers and total value of fraudulent claims in the UK, insurers report rapidly rising use of deepfakes in claims fraud with a skew towards low-value claims.^1,2 Apps have been used to manipulate real-life images, videos and documents in motor claims.³ Paper-based claims submissions have been affected.⁴ Deepfakes can also be used for cybercrime.

Along similar lines, disinformation – the deliberate spread of inaccurate information – is an evolving threat for the insurance industry. Accurate data and a reliable information environment is crucial for insurers. Fake or misleading news can distort reality, complicating claim assessments and eroding trust both in institutions and potentially the insurance industry itself.⁵ AI-powered bots and trolls engage in coordinated disinformation campaigns that are difficult to detect and combat, especially if disinformation is spread in social media groups.⁶ The societal cost can be sizable if topics like vaccination campaigns (eg during the recent COVID-19 pandemic) are affected.⁷ Social media's real-time nature and convincing appearance often bypass fact-checking. 

Recently an AI powered solution has pushed fake-news alerts that wrongly summarise reports from well-established news sources.⁸ Such usage can mislead the public and potentially erode trust, spark social unrest and volatility in financial markets.⁹ Moreover, fake news can mislead legal professionals and jurors by reinforcing their biases, ultimately affecting their ability to evaluate evidence objectively.¹⁰

Specialty: Deepfakes can be used in claims submissions and underwriting fraud, and also as a tool in cybercrime (eg, vishing).¹¹ There have been cases of hackers stealing personal data and using deepfakes to apply for IT jobs to gain pivotal access to companies' IT and digital infrastructure.¹² Cyberattacks of any nature can ultimately undermine earnings, including of insurers. The growing type of digital attack surface will likely drive increased demand for innovative cyber insurance solutions in the future.

Casualty: Deepfake technology can be the source of increased of litigation and claims. For example, if a policyholder is the victim of a deepfake scam and suffers financial losses, that person might seek compensation from their insurer, leading to potential disputes and increased liability for the insurer. The state of New Hampshire in the US has introduced a new law that permits victims of deepfakes to take private legal action. Granting a private right of action is particularly significant for liability insurers.¹³ This development could impact general liability and homeowners' policies, as well as other specialty lines of business, if deepfake-related civil lawsuits become more common.

Operations: Developing strategies to combat deepfakes and disinformation places additional operational demands on insurance companies, impacting efficiency and resource allocation.¹⁴ With the rapid evolution of deepfake technology, insurers must adopt new technologies to detect falsified information and fraudulent claims. Further, false narratives about an insurer's practices or financial health could harm its reputation. This could lead to loss of customer trust, potentially influencing market demand and policyholder engagement. It could also lead to loss of market share and share price weakness. To counter fraud, regulatory bodies may impose stricter compliance requirements on insurers to ensure they take adequate measures to detect and prevent fraud. However, none of this comes for free. The investment in new technologies to comply with regulations drives up the cost of providing insurance and, ultimately, likely also premium rates for policyholders.

Assets and financial markets: Industries most exposed to financial loss from deepfakes and disinformation include banks, fintechs, and investment firms due to their control over large sums of money and reliance on digital transactions. In the fintech sector, there was a 700% increase in deepfake incidents in 2023, highlighting the escalating threat.¹⁵ Other sectors like, for example, media, telecommunications, technology and pharma are vulnerable to manipulated content that can erode trust, spread disinformation, and trigger reputational and advertising losses. A 2024 survey revealed that 92% of companies experienced financial losses due to deepfake-related incidents, with 10% reporting damages exceeding USD 1 million.¹⁶