The $174 million scam

Allianz UK warns of a growing trend of scam artists using artificial intelligence to simulate damage and submit fake insurance claims, as the insurer combats over 34,200 cases of fraud last year with an estimated value of £174 million.

The insurer's specialist fraud detection unit has uncovered a growing trend of scam artists stealing vehicle images from social media and using artificial intelligence to simulate damage before submitting fake insurance claims.

Other tactics include attempting to impersonate victims without their knowledge or consent, trying to change details, and 'collaborating with other criminals to sell compromised identities', the insurer warns.

Image manipulation on the rise

But it's not just professional swindlers who are using AI to commit insurance fraud; Allianz says it has tracked a rise in image manipulation to 'inflate damage in photos' from commercial and personal customers.

'Fake images such as watches, jewellery,fabricated insurance documents and flooded property have all been used in attempts to get claims paid,' it said.

Drivers unwittingly fuel the scam

According to a survey of 2,000 UK motorists, over half of drivers aged between 18 and 34 said they have previously posted a picture of their car online with the registration plate visible.

In one case Allianz recently investigated, an individual had posted a picture of his van on his business social media page, and a claim was pursued in his name for an accident that never took place.

Allianz received images of his vehicle from the fraudsters, showing the front bumper had been 'cracked' in the alleged accident , along with a false repair invoice totalling around £1,000.

Who is the unnamed buyer?

Allianz received a claim for an accident that had been staged using a different Mercedes that looked very similar to the one online, with AI used to change the number plate.

Fraud investigations revealed the car was, in fact, a different model and that the incident was fake.

In another instance, Allianz received an uploaded driving licence from a customer applying for a car insurance policy.

However, investigations revealed that AI had been used to create the image of the driving licence, and the identity used had been stolen.

The challenge ahead

The rise of AI and photo editnig has become the latest 'challenge for the industry', says Matt Crabtree, head of financial crime intelligence and investigation strategy at Allianz UK.

'We're seeing a mix of fraudsters exploiting what they can find online to submit fake claims and take out insurance,as well as customers exaggerating and fabricating claims for money.

This is a wide-scale problem, as we're seeing it across all our products in both commercial and personal lines.

Our fraud team continues to develop existing fraud controls.

However, the rapidly changing nature of how fraudsters operate poses significant risks to innocent drivers.

We continue to combat this type of fraud and demonstrate the value of insurers in keeping costs down for honest motorists, while also acting as a deterrent to anyone thinking of using a fake insurance claim to make extra money.