Generative AI: Double Agent Serving Good and Evil in Claims Management

In the fast-paced and high-stakes world of claims management, generative AI has emerged as both a hero and a villain. This transformative technology has the potential to streamline operations, settle claims faster, and detect fraud with unprecedented precision. However, like a double agent, it also equips bad actors with sophisticated tools to exploit vulnerabilities within the system. The same advancements that allow insurers to enhance their operations are also being used by criminals to perpetrate increasingly complex fraud schemes.

“It’s truly become an arms race,” says Shane Riedman, president of anti-fraud analytics at Verisk. “An arms race of good versus evil.” As insurers innovate to identify and mitigate risks, criminals are leveraging AI’s rapid advancements to stay one step ahead. This evolving battle highlights an urgent need for claims professionals to adapt—and adapt fast.

The Rise of Fraudulent AI-Generated Content

One of the most alarming trends in claims management today is the manipulation of digital media to support fraudulent claims. AI-powered tools now enable the creation of hyper-realistic deepfakes, manipulated photos, and falsified documents that challenge traditional fraud detection methods. In this new landscape, the boundary between authentic and fabricated evidence is becoming increasingly blurred.

Nicos Vekiarides, CEO of Attestiv, highlights the scale of the issue: “We are seeing fraudulent images used as part of insurance claims—and a lot of them.” While insurers have made significant strides in leveraging photos and videos to settle claims efficiently, these very innovations are now being weaponized against them. Fraudulent content, such as doctored images of damage or fabricated documents, can deceive even the most experienced claims adjuster, threatening to compromise the integrity of the claims process.

Battling the Challenge of Staying Ahead

As AI technology evolves at an exponential rate, the tools used to detect fraud must evolve just as quickly. Deepfake technology, for instance, is advancing so rapidly that traditional detection methods are increasingly inadequate. As this technology becomes more sophisticated, relying solely on manual methods—such as human adjusters spotting manipulated media—places an unrealistic burden on claims professionals.

The major challenge for insurance companies, therefore, is not just identifying these fraudulent claims, but adapting to the technology themselves. Simply put, they must adopt and integrate AI-powered tools that can detect fraud in real time.

One promising solution is a “dragnet approach,” where detection analytics programs are used to monitor all digital claims media for signs of manipulation. These tools can scan photos, videos, and documents for inconsistencies and irregularities that might indicate fraud. However, these systems require time to implement and fine-tune, and many insurers are still in the early stages of adoption.

Doubling Down on Fundamentals

While advanced AI-based tools are essential in the fight against fraud, they cannot replace the foundational practices of claims management. As Riedman points out, traditional fraud indicators—such as inconsistencies in claimant stories, suspicious timing, or patterns of behavior—still play a significant role in identifying fraud. Claims that involve manipulated digital media often come with other “red flags” that can signal fraudulent activity.

This points to a dual strategy that insurers must adopt: integrating cutting-edge AI tools while simultaneously reinforcing the fundamental practices of fraud detection. By combining the power of AI with traditional investigative methods, insurers can create a more resilient defense against evolving fraud tactics.

For example, insurers can use AI to analyze digital content more effectively, but human adjusters should continue to investigate suspicious claims in parallel, taking into account the broader context of the claim. This multi-layered approach will ensure that insurers stay ahead of fraudsters who are increasingly relying on sophisticated tools to manipulate the system.

The Responsibility of Insurers

As the frequency and sophistication of AI-generated fraud increase, the responsibility for detecting and preventing fraud falls squarely on the shoulders of insurers. This responsibility is not only a matter of fiduciary duty to policyholders and shareholders but also of regulatory compliance. Insurers have a legal obligation to ensure that claims are settled accurately and fairly, and this responsibility extends to preventing fraud that could undermine the integrity of the insurance process.

AI-generated fraud, especially in the form of deepfakes, is a new frontier in the fight against fraud. As these tools become more accessible and easier to use, insurers must ensure they are equipped with the technologies and knowledge to identify and prevent them. However, access to advanced detection systems remains uneven across the industry. Smaller insurers, in particular, may lack the resources to develop or acquire state-of-the-art tools, leaving them more vulnerable to fraud.

One potential solution lies in regulatory incentives to invest in fraud-detection technologies. Such measures could help level the playing field, allowing smaller insurers to access the same cutting-edge tools that larger players have. Unfortunately, legislative focus is currently more concerned with protecting consumers and the public interest, rather than addressing the unique challenges faced by insurers in combating AI-generated fraud.

Bottom Line:

Generative AI is not just a tool for insurance companies; it is a force that can either reshape the claims landscape for the better or for the worse. The challenge now is for insurers to embrace innovation while ensuring that they have the necessary safeguards in place to prevent AI from being used as a weapon for fraud.

At DOXA, we are committed to helping the insurance industry adapt to this rapidly changing environment. We believe in the power of innovation to drive positive change, and we are working to help insurers leverage cutting-edge technologies to stay ahead of evolving fraud tactics. By investing in AI-powered detection systems, collaborating across the industry, and reinforcing fundamental fraud detection practices, we can turn generative AI from a double agent into a powerful ally in the fight against fraud.

Let’s connect to discuss how your organization can navigate these challenges and unlock new opportunities for growth. Together, we can build a future where AI serves as a force for good—helping insurers reduce fraud, settle claims faster, and deliver better outcomes for policyholders.