A surge in fraudulent insurance claims involving doctored images is alarming insurers in the UK and driving up motor insurance costs to record levels.
Rise of ‘Shallowfakes’
Allianz, an insurance company, reported a staggering 300% increase in incidents between 2021-22 and 2022-23 where apps were used to manipulate images, videos, and documents. According to Allianz, this trend “has all the signs of becoming the latest big scam to hit the insurance industry”.
Zurich UK, another major insurer, has also observed a rise in claims that have been altered using “shallowfake” technology. This technology utilizes conventional editing software on smartphones and apps like Photoshop, unlike deepfakes, which are typically created using AI.
In one reported case, an image of a tradesperson’s van was taken from social media and then edited to add cracks to the bumper to fabricate an insurance claim.
In one instance, Allianz recounted how a photo of a tradesperson’s van, posted on social media for business purposes, was then used to pursue a fraudulent claim for an accident that never happened. The fraudsters provided images suggesting the front bumper was damaged, along with a phony repair invoice exceeding £1,000. Upon investigation, the LV= fraud team discovered that the photo was identical to the one on social media, with the exception of the added damage.
Fraud Techniques
Scott Clayton, the head of claims fraud at Zurich UK, stated that shallowfakes are especially prevalent in motor insurance. He highlighted how fraudsters are adding fake registration numbers to vehicles that have been written off. He explained, “We have seen an increase in people locating total loss vehicles on salvage agents’ websites and then implanting a registration number on to that car. 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.”
Zurich also reported a rise in claims manipulated with deepfake technology, including fabricating engineer reports and repair estimates. Previously, criminals needed actual vehicle collisions for “crash-for-cash” schemes. As Clayton noted: “People can now create a fraudulent claim entirely from behind their computer and extract significant sums of money because these cars are total losses.”
Impact on Motor Insurance
This rise in fraudulent activities is a contributing factor to higher motor insurance premiums. Recent data indicates that the average cost of comprehensive motor insurance in the UK for the first quarter of this year was about a third (33%) or £157 higher than the same period in 2023. This data was released by the Association of British Insurers.
