Kathmandu. Artificial intelligence (AI)-driven insurance claims have been found to include fake number plates, counterfeit watches and exaggerated damage. Cardiff-based insurance company Admiral has reported a 71 per cent increase in fraud in 2025 compared to the previous year, partly due to the increased use of AI software to manipulate evidence.
According to the Insurance Fraud Bureau, the industry is “very concerned” about AI-generated insurance claims and is “investing in technology” to fight this threat. If a customer fakes or inflates their claim, they risk being rejected, their policy cancellation and lawsuits. “It’s a trend across the insurance industry,” said Haith of the Admiral’s Household Insurance claims team, “We’re seeing that AI is being used to manipulate images to make them look particularly damaged, even to create and forge documents that never existed.” ’
Due to the nature of their work, BBC Wales was told not to use the surnames of the staff. The entire insurance industry is working together to fight the threat posed by AI to both customers and organized crime gangs.
Documents shared with BBC Wales reveal how AI was used to manipulate images and create images of objects that never existed. All of these were submitted to the admiral as part of the insurance claim. However, the firm’s fraud team found out.
The insurance claim includes an image of a gold and diamond watch. Which was apparently created by AI. However, the technology was also used to exaggerate damage to the rear of the car.
In another example, the car’s license plate was changed and repositioned to mimic the insurance claim. All of these attempts were discovered and the claims were denied.
Despite the rise in AI-induced fraud, the insurance industry has tried to match the technology with its detection systems. “As those tools become more readily available, we also have some very good anti-fraud software,” Haith said. Which we use. Which can detect AI. It can detect if something has been tampered with, and we’re getting a lot better at finding that across the market. ’
According to John Davies of the Insurance Fraud Bureau, “opportunistic” customers were using AI to inflate real insurance claims. But organised crime gangs were also using the technology to create “fake documents”. This makes their fraud more effective,” he said, adding that the insurance industry is very concerned about this and is investing in technology. This is a rapidly changing issue. But I think the positive thing is the collaboration within the industry. Understanding that this is a threat, but there are also opportunities for how we can share knowledge and best practices to help use AI in a positive way. ’
As insurance premiums rise for everyone to cover costs associated with insurance fraud, those caught defrauding the system could face criminal charges. “The consequences are huge,” said Flora, who is part of the admiral’s team that evaluates potential fraud claims. ’
In the worst-case scenario, such fraud can lead to criminal convictions, according to Flora. “It can make your life very difficult,” he said. – Hugh Thomas/BBC
