Recently a LinkedIn post went viral in which a woman faked her own car accident.
She used AI to generate images of her “smashed” car, bruises on her face from her “injuries”, as well as a believable car crash scene and an authentic-looking receipt.
The point of the exercise was to show how difficult AI is making it for the insurance industry to verify legitimate claims.
This isn’t an isolated concern – it signals a broader challenge for insurers globally. This is because AI tools like ChatGPT can generate fake images and can be done so by anyone.
“There is no doubt that AI is changing the game for insurance and risk professionals,” says Ayanda Mdhluli, senior manager: cyber security at Old Mutual Insure. “But we are also embracing it as a tool to protect our customers, improve efficiency, and enhance fraud detection.”
Mdhluli explains that Old Mutual Insure’s current claims process is structured in such a way that evidence is scrutinised from multiple sources, and first on the scene providers like tow truck drivers also submit evidence. Assessment centres are also key to the process.
“We appoint expert panel beaters or professional assessors to physically inspect the vehicle,” says Mdhluli. “Relying solely on images – especially as AI-generated visuals become more sophisticated – is no longer sufficient.”
Mdhluli says while the concept of AI fraud is still relatively new, there are plenty of fraudulent scams where consumers are either unknowing victims or try to defraud their insurer.
Some common insurance fraud scams that Old Mutual Insure has seen includes cases where the same damage photos have been used in multiple claims, or where photos pulled from the internet are submitted alongside fabricated invoices. “We’ve picked up repeated invoices with headers from third-party suppliers like glass fitment centres or repairers and are starting to see the same invoice submitted across different claims,” says Mdhluli.
In one instance, an individual staged an accident, dropped off a vehicle at a panel beater, and was linked to a syndicate operating across provinces. These kinds of insurance scams are on the rise – particularly in economically strained regions like the Eastern Cape.
To counter this, the insurer is ramping up its use of geotagging, biometrics, and geometrics – where possible – and is working closely with the Insurance Crime Bureau to identify red flags. The company is also using AI detection tools to verify whether documents or images submitted are artificially generated.
“We take this very seriously. When we identify a fraudulent claim, we report it to the Insurance Crime Bureau, which alerts the wider industry. There are consequences for this type of behaviour, including blacklisting, a cancellation of your insurance policy, and even jail time.”
Mdhluli says that in the current economic climate, in which many are facing financial hardship, it is important to remain vigilant and do the proper due diligence and research where possible to not fall prey to scams.
“The second-hand vehicle market is especially prone to scams. We encourage all vehicle buyers to exercise caution and conduct thorough checks before purchasing a vehicle – especially in today’s tough economic environment, where scams from tricksters looking to make easy money are common occurrences.”
Mdhluli adds that when taking out an insurance policy, the onus is on the policyholder to ensure that all material information provided is accurate. Insurers rely on this information to assess and underwrite the risk appropriately. The policyholder also has specific rights and responsibilities when signing on the dotted line. “As the lines between real and fake blur, we’re staying one step ahead to protect our clients, our partners, and the integrity of the insurance system.”
Mdhluli offers some tips to help protect yourself against scams when buying a car, which will also ensure you don’t take make insurance missteps:
- Ask for the NaTIS certificate. This official registration document proves legal ownership. If the car is still under finance, the bank will hold it until the loan is fully paid. Walk away if the seller can’t provide it or explain why it’s missing.
- Check that details match. Make sure the VIN, engine number, make, and model listed on the licence disc and registration documents match the car.
- Look out for fake documents. Typos, inconsistent fonts, or poor formatting may indicate a forgery.
- Avoid vehicles with signs of tampering. Damaged locks or ignition systems are red flags for possible theft.
- Steer clear of foreign-registered cars. Vehicles with non-SA number plates or registered in neighbouring countries can be difficult to insure.
- Spot grey imports. Features like foreign language labels, headlight wipers, or fender mirrors may suggest the vehicle was illegally imported.
- Request a microdot certificate. This confirms the car’s ID and helps with verification in the event of a claim.