Insurance Fraud Surges as Criminals Use AI to Fabricate Claims
Cardiff-based insurer Admiral recorded a 71% rise in fraud during 2025 compared with the previous year, with artificial intelligence playing an increasingly central role. The company's fraud detection team has identified AI-generated fake number plates, fabricated watches, and exaggerated vehicle damage submitted as evidence in claims.
The Insurance Fraud Bureau said the industry is "heavily concerned" about AI-generated claims and is "investing in technology" to tackle the threat.
What insurers are seeing
Admiral's fraud team has detected claims featuring AI-generated images of luxury watches that never existed. In other cases, customers used AI to manipulate photographs of damaged vehicles, either exaggerating genuine harm or creating false damage entirely.
One claim involved a car number plate that was altered and repositioned to support a duplicate claim. All of these attempts were caught and rejected.
"We see AI that's been used to manipulate images to look like they've been damaged in a certain way, even to create and fabricate documents that were never there in the first place," said a member of Admiral's household claims team.
Two categories of fraud
The Insurance Fraud Bureau distinguishes between opportunistic customers and organised crime gangs. Individual claimants are using AI to exaggerate genuine claims, while criminal networks deploy the technology to create fake documents that make their fraud more efficient.
"The industry is heavily concerned about this and investing in technology," said John Davies from the Insurance Fraud Bureau. "What is positive is the collaboration across the industry, the understanding that it is a threat, but also there are opportunities in how we can share knowledge and best practice."
Detection and consequences
Insurers have matched the threat with their own detection systems. Admiral uses anti-fraud software capable of identifying AI-generated content and detecting image manipulation.
Customers caught submitting fraudulent claims face serious consequences. Claims can be rejected, policies cancelled, and criminal prosecution pursued. A member of Admiral's claims assessment team said the outcomes "can be life-changing, for at least the short term," and in worst cases result in criminal conviction.
Fraudulent claims also drive up premiums for all customers, as insurers factor fraud costs into pricing.
For insurance professionals, understanding AI for Insurance and Generative AI and LLM is becoming essential for detecting and preventing these schemes.
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