Fraud - market insights Q3/Q4 2024

Generative AI 

Previously, creating high-quality content such as realistic images, videos, or sophisticated text, required specialised skills and expensive software. Now, with generative AI tools anyone can produce professional-grade content with ease. 

This accessibility empowers individuals to express creativity, innovate, and solve problems in ways that were once out of reach. However, this also comes with challenges, as it enables not only legitimate uses but also potential misuse, inadvertently equipping fraudsters with the tools to craft more convincing false claims documentation, manipulate data, and exploit system vulnerabilities.  The industry relies on documentation verification to validate claims and detect fraud, but detection of the use of AI remains a challenge. 

Examples of misuse emerging in fraudulent insurance claims include the creation of synthetic identities (using AI to create a fake identity) and fraudulent document generation (fake invoices, websites etc).  

Ghost broking  

Ghost broking is a well-publicised issue amongst insurers and brokers, most often associated with motor insurance policies. 

Insurers report that this is a continuing problem, along with more general application fraud. There are risks to all brokers when placing policies, including professional indemnity insurance.   

Ghost broking remains prevalent in 2024 with the City of London Police’s Insurance Fraud Enforcement Department serving nine cease and desist notices in February this year.  This has resulted in 438 arrests, and asset seizures of circa £19 million. 

Rapid developments in AI are likely to increase instances of ghost broking, not least because the sophistication by which fraudsters dupe innocent members of the public will be that much better.   

Whilst it seems an insurmountable hurdle to tackle the ghost broking problem, hope is not lost.   

The Online Safety Act 2023 received Royal Assent on 26 October 2023.  By virtue of sections 38 and 39, providers of online content owe a duty to ensure that fraudulent content is swiftly removed, failing which providers could be liable for substantial fines.   

We have also identified ghost broking as a key update in the Professional liability and Property section.

Impact of a Labour Government 

In its manifesto Labour pledged to “introduce a new expanded fraud strategy to tackle the full range of threats, including online, public sector and serious fraud. This includes working with “technology companies to stop their platforms being exploited by fraudsters.” Further details on this are awaited.