South Africa’s insurance sector is becoming increasingly aware of the growing threat posed by artificial intelligence in the hands of fraudsters, and is actively enhancing its defences to confront this emerging risk. Industry leaders are now adopting advanced technological tools to detect deception, ensure claim integrity, and hold perpetrators accountable for fraudulent activities. This new wave of crime is not only challenging the industry’s technological limits but is also forcing insurers to rethink the way claims are verified and assessed.
Key Takeaways
- AI Is Fueling Insurance Fraud in South Africa: Fraudsters are increasingly using AI tools to generate fake images, documents, and invoices for fraudulent insurance claims, prompting insurers to overhaul their verification processes.
- Insurers Are Fighting Back with Advanced Technology: Companies like Old Mutual Insure are now using AI detection tools, biometric data, and geotagging to detect manipulated claims and are working closely with the Insurance Crime Bureau to report offenders.
- Consequences Are Severe for Fraudsters: Individuals caught submitting fraudulent claims may face blacklisting, cancellation of insurance policies, and even criminal prosecution, while organised syndicates are also being uncovered across provinces.
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AI Tools Being Deployed to Detect Tampering
Insurers have begun deploying artificial intelligence systems capable of identifying whether submitted images, documents, or other materials have been tampered with or synthetically generated. These efforts are part of a broader strategy to crack down on individuals who submit fraudulent claims, which can include placing offenders on internal blacklists or even initiating legal proceedings that may result in criminal convictions. This technological shift comes amid mounting financial losses linked to sophisticated forgery attempts that bypass traditional screening methods.
Ayanda Mdhluli, who serves as a senior cybersecurity manager at Old Mutual Insure, indicated that the company has observed a marked increase in attempts to use AI for scams and false insurance claims within South Africa. Fraudsters are turning to image-generation technology available via AI tools to fabricate or manipulate visual and documentary evidence in support of illegitimate claims.
The accessibility of these tools means that virtually anyone with an internet connection can generate fake accident photos or forged invoices within minutes, making it increasingly difficult to detect fraud without advanced tools.
Insurers Respond with Their Own AI Capabilities
In light of these developments, insurers are responding with equal technological sophistication. Insurers are not only strengthening fraud detection capabilities using AI, but also focusing on improving customer protection and operational efficiency through smart automation. This proactive approach includes reassessing how claims are verified and ensuring that outdated methods are replaced by more rigorous and reliable processes. Industry players are investing millions into technology partnerships and forensic systems that can detect pixel-level manipulation, unusual metadata, or deepfake audio and video evidence.
The claims assessment procedures at Old Mutual Insure have undergone significant changes, placing greater emphasis on the validation of evidence from several independent sources. First responders at the scene of an incident, including tow truck drivers and other service providers, are now actively contributing verified material to support the claims investigation process. This step has become necessary, as insurers can no longer place full confidence in photo submissions alone due to the rise in AI-generated forgeries. The days of sending in a few snapshots to claim damages are over; now, each claim is scrutinised with the assumption that it could be falsified.
Broader Use of Biometric and Location-Based Verification
Insurance providers are also increasing their reliance on biometric data, geotagging, and other forms of geometric verification to enhance the authenticity of submitted claims. Old Mutual Insure has partnered closely with the Insurance Crime Bureau in order to flag suspicious activity early and share intelligence across the industry. At the same time, the company continues to refine its AI tools to determine if submitted materials, such as documents or images, are artificially produced.
This cross-collaboration has enabled the industry to develop fraud trend databases and real-time alert systems that flag unusual claim patterns or shared data points across multiple fraudulent cases.
Fraudulent claims are treated with a high level of seriousness. Once a fraudulent submission is confirmed, the matter is escalated to the Insurance Crime Bureau, which alerts the broader insurance sector. Those found guilty of fraud can face harsh consequences, including being blacklisted from future cover, having their current insurance policies cancelled, and in severe cases, facing criminal prosecution with the possibility of imprisonment.
Being blacklisted can affect your ability to access loans, credit, and even future employment in regulated sectors; the consequences stretch far beyond a single rejected claim.
Deepfakes and Fake Documentation Becoming More Commonplace
Mdhluli stated that while the application of AI in fraudulent activities is still relatively recent, there is already a concerning trend of insurance scams that range from sophisticated fraud to opportunistic deception by policyholders. Common tactics include the reuse of the same photos across different claims, the use of internet-sourced images, and the submission of fake invoices crafted to look legitimate. In several cases, image-generation tools have been used to fabricate entirely fictional car accident scenes.
These scams are becoming more layered, with some involving multiple people across provinces, operating under the radar until a pattern emerges.
In one instance, a claimant was connected to a larger criminal syndicate operating across provincial boundaries after staging a fake accident and delivering a vehicle to a complicit panel beater. Patterns such as repeated use of identical invoice headers from service providers like windscreen replacement centres have also raised red flags. These practices are reportedly increasing in areas under financial pressure, including parts of the Eastern Cape. Investigations have uncovered that some of these syndicates run parallel operations across different insurers, submitting dozens of claims in a short timeframe before detection.
Second-Hand Market Also Targeted by Scam Artists
Scam activity is not limited to policyholders but also affects consumers purchasing second-hand vehicles. Buyers in this space often fail to carry out proper checks, making them more vulnerable to deception. In the insurance context, Mdhluli stressed that policyholders have a duty to provide accurate and truthful information, as this is essential for insurers to assess and underwrite the associated risk properly. Consumers also have legal responsibilities when agreeing to policy terms. Second-hand markets have become a favourite hunting ground for con artists, especially in online platforms where stolen or previously written-off vehicles are given a second life through falsified papers.
Advice for Consumers to Avoid Fraud and Scams
To guard against fraud and deepfake tactics in the second-hand vehicle market, potential buyers are encouraged to request the NaTIS certificate, which serves as proof of legal vehicle ownership. If a vehicle is still under financing, the original document will be held by the bank until the loan is settled. If the seller is unable to present the certificate or cannot reasonably explain its absence, the buyer should consider abandoning the transaction. Even when a document is presented, it is crucial to verify that the details align correctly and to examine the paperwork for any signs of forgery, such as spelling mistakes, formatting issues, or inconsistent fonts. Buyers are also advised to conduct background checks via the eNatis or SAPS stolen vehicle database and, if possible, have a mechanic or expert examine the vehicle before completing the sale.
Conclusion
The rise of AI-generated fraud has prompted a major shift in how South African insurers handle claims and assess risk. With scammers exploiting new technology to stage incidents and forge documents, the industry is responding by investing in equally sophisticated tools and partnerships. Policyholders are urged to provide accurate information, while consumers, especially those in the second-hand vehicle market, must remain vigilant to avoid falling victim to increasingly convincing scams.
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