Insurance fraud is nothing new, but today, it’s getting a serious tech upgrade. Fraudsters are now using AI to fake damage, invent luxury items, and even clone car number plates.

 And it’s working, for a while at least.

Cardiff-based insurer Admiral reported a massive 71% spike in fraud cases during 2025. The company points directly at AI-generated images as a major cause.

This is a growing crisis hitting every insurer in the UK.

Creative Scams

So what does AI insurance fraud actually look like?

Admiral’s fraud team has seen it all. One customer submitted a photo of a gold and diamond watch as proof of ownership. But the watch never existed; AI created it from scratch.

In another case, scammers used AI to exaggerate car damage. A few bumper scratches became a write-off. The images looked convincing, but not convincing enough.

Then there were the cloned number plates. Fraudsters took a real photo of a damaged car, swapped the plate using AI tools, and tried submitting the same claim twice under different identities.

Every single one of these attempts got caught.

Easy Fraud 

AI image tools are widely available, and many are free. Some take just a few clicks to produce realistic-looking photos of damage, documents, or valuables.

That low barrier is exactly what worries the Insurance Fraud Bureau. 

John Davies from the bureau explained that both everyday people and organised crime gangs are exploiting these tools.

Opportunistic customers use AI to slightly inflate real claims. Organised gangs go much further; they build entirely fake documents, fake identities, and fake evidence from the ground up.

“It makes their fraud more efficient,” Davies said.

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Human Costs

Every fraudulent claim has a ripple effect- insurers pay out more, premiums go up, and honest customers foot the bill.

But the person committing fraud pays a steep price, too, if they get caught.

Flora, part of Admiral’s fraud assessment team, didn’t sugarcoat it. She said the consequences can be truly life-changing. 

We’re talking policy cancellations, rejected claims, and in serious cases, criminal prosecution.

A fraud conviction follows you, affects your ability to get insurance, credit, and even employment. “It’s simply not worth it,” Flora said plainly.

Antifraud Technology

Admiral uses specialist anti-fraud software designed to detect AI-generated images. These tools look for telltale signs that a photo has been manipulated or entirely created by a machine.

Haith, from Admiral’s household claims team, said detection is improving fast. “We’re getting a lot better at detecting it across the market,” he noted.

The Insurance Fraud Bureau is also pushing for industry-wide collaboration. Insurers are sharing data, best practices, and detection techniques with each other.

It’s essentially an arms race – fraudsters get smarter, and insurers get smarter faster.