How Property and Casualty Insurers Can Combat Fraud with AI-Driven Multimodal Technology

Insurance fraud remains one of the costliest crimes in the U.S., second only to tax evasion, with property and casualty (P&C) insurers bearing a substantial share of the burden. With an estimated 10% of P&C claims being fraudulent, the industry is facing annual losses of over $120 billion. These losses ultimately drive up premiums for honest policyholders, fueling consumer dissatisfaction and attrition, especially in an era of inflation-driven rate hikes.

To address this challenge, insurers are increasingly turning to AI-powered multimodal technologies. These advanced tools integrate data from various sources—text, images, video, and sensor inputs—to identify inconsistencies and anomalies in real time. This enables carriers to detect both soft fraud (like exaggerated damages) and hard fraud (such as staged accidents or fabricated claims) more effectively. Fraud detection is becoming a top priority, with 35% of insurance executives identifying it as a key area for AI investment over the next year.

Technologies such as text mining, sentiment analysis, geospatial imaging, IoT surveillance, and simulation modeling are being embedded across the claims lifecycle to catch fraud earlier and more accurately. Combined with human oversight, these tools can significantly reduce false positives and operational inefficiencies, enhancing investigative effectiveness and regulatory compliance.

Ultimately, the synergy between AI and skilled claims professionals offers a path forward. As detection technology becomes more sophisticated and fraud schemes evolve, insurers that invest in both automation and talent will be better positioned to protect their books of business, reduce financial losses, and pass savings back to policyholders.