Businessman receive money in the envelope offered in file - anti bribery and corruption concepts

Insurance fraud remains the second-most costly white-collar crime in the U.S. after tax evasion, according to a recent report by Deloitte.

Property and casualty (P&C) insurers lose an estimated $122 billion annually, the data showed, with fraud-detection technology now estimated to grow from $4 billion in 2023 to $32 billion by 2032 to notch an eightfold increase.

At the same time, the Federal Bureau of Investigation reports that insurance fraud costs an average American family $400 to $700 annually due to increased premiums to cover the expense.

“Continuing to raise premiums to offset fraud losses is likely not a viable strategy for long-term profitability and market share growth,” Deloitte said in the report. “By combining AI-driven anti-fraud technologies with advanced data analytics (depending on the law of each jurisdiction), insurers can enhance their capabilities to detect and prevent fraud. Insurers that pair sophisticated technology with human enablement can detect claims fraud and could potentially save billions of dollars for policyholders.”

How can AI help detect and prevent fraud?

  • Text analytics—Natural language processing analyzes textual data of claims forms, emails, and social media posts to identify keywords and entities. While claims with suspicious language or inconsistent details can be flagged for further investigation, regulations like the Colorado AI Act require AI algorithm-based models to avoid discrimination and bias when flagging risk.
  • Audio-image-video analysis—Speech recognition and sentiment analysis can examine customer calls for signs of duress, allowed under the European Union’s AI Act on emotion inference for safety.13 Photo analytics can uncover irregularities in metadata, manipulation, and repeated use. Causation analytics can identify if alleged injuries were likely consistent with the experienced accident. Video analytics can verify the occurrence and extent of damage, identify authenticity of images, and highlight signs of tampering or staging.
  • Geospatial analysis— Satellite images and comprehensive 3D drone footage can verify the extent and location of damage that may not be clearly visible in physical inspections. This could also reduce the risk of personal injury to claims personnel, especially at natural disaster sites.
  • Internet of Things data—Real-time surveillance devices like vehicle telematics can reconstruct accidents and verify the legitimacy of claims. Smart home sensors like water leak detectors and security cameras can help gather evidence that can be used to verify claims and detect fraudulent or staged activities.
  • Simulation models—Replicating the behavior of medical providers, repair shops, and others that individuals may work with under different scenarios in a controlled virtual environment can identify patterns and deviations from standard industry practices and detect instances such as overbilling, unnecessary services, and coordinated activities or probable collision rings between entities.

NOT FOR REPRINT

© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.