AI drives major rise in car insurance fraud as criminals fake evidence

Scammers are now using artificial intelligence (AI) to doctor photographs in order to commit car insurance fraud. An investigation by Allianz, parent company of insurance firm Liverpool Victoria (LV=), has found that such cases across the entire insurance industry have risen by as much as 300 per cent in the last year, with new investment targeted at trying to identify such false claims.

Generative AI features on photo editing apps are more accessible than they’ve ever been, and crooks are utilising this technology in order to edit and then submit so-called ‘shallowfaked’ images and videos as evidence in fraudulent insurance claims.

One example of a doctored image given by LV= was submitted by a van driver who attempted to make it look as if their vehicle had damage on the front bumper. This image was submitted as part of a claim, which also contained an invoice of over £1,000 to cover ‘repairs’. The insurance firm’s anti-fraud team investigated this claim and found that the original unedited image was on the fraudster’s own social media profile, proving that the submitted photograph had been doctored.

Matt Crabtree heads up Allianz’s Financial Crime Intelligence & Investigation Strategy. He told Auto Express that “there is some fantastic technology out there, which is making our lives so much better in many ways. However, the sad reality is that fraudsters are using this same technology for their own illegal purposes”.

Allianz and LV= recently teamed up with analytics agency Clearspeed in order to further clamp down on fraudulent claims that use AI to try and trick the system. Clearspeed’s technology will supposedly be able to analyse the voice patterns of potential fraudsters to help determine whether the claim is genuine.

Ultimately, this is an issue that appears to be plaguing the entire industry. Earlier this year, Scott Clayton, the head of fraud at rival insurance firm, Zurich, said companies must “prepare for a rise in deepfake AI fraud”.

“We have seen an increase in people locating total loss vehicles on salvage agents' websites and then implanting a [numberplate] registration number onto that car,” Clayton explained. “There are then claims made for that vehicle and a claims handler assessing this claim would take that at face value, that it is that actual vehicle.”

Such a rise in fraudulent claims could not come at a worse time, as Citizens Advice recently told the Treasury Select Committee that people are currently “having to make impossible choices of whether to pay for their car insurance or put food on the table”, given the spiralling cost of premiums.

While Crabtree insists that Allianz’s latest partnership and investment with Clearspeed will “protect honest customers and keep costs down”, data shows that car insurance prices have, on average, risen by as much as 34 per cent in the last year, with payouts only rising by 18 per cent.

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