Insurers Using Technology to Outsmart Scammers
Insurance fraud is becoming more sophisticated with the rise of AI. A recent viral LinkedIn post exposed how a woman faked a car accident by generating AI images of a damaged car, bruises, a crash scene, and even a fake receipt. This highlights a growing challenge for insurers worldwide: verifying legitimate claims when fabricated digital evidence can look so convincing.
Ayanda Mdhluli, senior manager of cyber security at Old Mutual Insure, explains that while AI poses new risks, it also offers tools to improve fraud detection and customer protection. Their claims process involves gathering evidence from multiple sources, including first responders like tow-truck drivers. Physical inspections by expert assessors remain crucial since relying solely on images, especially AI-generated ones, is no longer enough.
Fraudulent claims are not limited to AI manipulation. Common scams include submitting the same photos for different claims or using images and invoices pulled from the internet. Mdhluli shares that repeated invoices with headers from repair shops or glass fitment centres are often used across multiple claims. In one case, a staged accident was connected to a provincial syndicate, highlighting the rise of organised fraud, particularly in economically challenged areas.
Technology Steps Up
To address these issues, insurers are increasing their use of geotagging, biometrics, and geometrics to verify claim details. They work closely with the Insurance Crime Bureau to flag suspicious activity. AI detection tools are also employed to spot artificially generated documents and images.
When fraudulent claims are identified, insurers report them to the Insurance Crime Bureau. This can lead to blacklisting, policy cancellations, and even legal consequences including jail time. Vigilance and thorough verification remain key defenses against fraud.
Protect Yourself When Buying a Car
The second-hand vehicle market is particularly vulnerable to scams, which can also affect insurance claims. Mdhluli offers practical tips to help buyers avoid falling victim to fraud and ensure they don’t make insurance missteps:
- Ask for the NaTIS certificate. This official registration proves legal ownership. If the car is under finance, the bank will hold the certificate until the loan is paid off. If the seller can’t provide it or explain why, walk away.
- Verify all details match. Check that the VIN, engine number, make, and model on the licence disc and registration documents match the vehicle.
- Watch for fake documents. Typos, inconsistent fonts, or poor formatting often indicate forgery.
- Avoid vehicles with signs of tampering. Damaged locks or ignition systems can be red flags for theft.
- Be cautious with foreign-registered cars. Vehicles with number plates from outside South Africa or neighbouring countries can be difficult to insure.
- Spot grey imports. Features like foreign-language labels, headlight wipers, or fender mirrors may suggest illegal importation.
- Request a microdot certificate. This certifies the car’s identity and aids verification during claims.
Ensuring accurate and complete information when taking out an insurance policy is essential. Insurers depend on this data to assess risk correctly, and policyholders have rights and responsibilities when signing their contracts.
For insurance professionals looking to stay ahead of AI-driven fraud tactics and improve detection skills, exploring specialized AI training can be valuable. Resources like Complete AI Training’s courses for insurance professionals offer practical knowledge to enhance fraud prevention capabilities.
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