Insurance fraud has transformed from basic slip-and-fall schemes into sophisticated operations, such as using artificial intelligence to create fake medical records and synthetic identities.

To stay ahead of increasingly complex fraud schemes, insurers are integrating even more cutting-edge tools into their prevention measures to enhance their continual efforts in predicting and preventing fraud, according to Matt Murphy, head of Special Investigations & Anti-Fraud Solutions at The Hartford. Other measures include a partnership model with customers to educate them on how insurance fraud occurs and warning signs to watch for, Murphy said.

Murphy has followed the evolution of insurance fraud firsthand during a career spanning 35 years. In addition to leading anti-fraud programs at The Hartford, Murphy is an industry expert and advocate. He is board chair for the National Insurance Crime Bureau (NICB), a nonprofit that fights insurance fraud and theft. Murphy’s involvement in anti-fraud organizations also includes the Coalition Against Insurance Fraud (CAIF) and the Verisk/ISO Claims Council.

The landscape of insurance fraud has undergone dramatic changes over the past three decades, Murphy said.

“When I started in this field 35 years ago, we primarily dealt with basic schemes like slip and falls and staged auto accidents,” Murphy said. “Today’s fraudsters operate with the sophistication of organized crime, moving fluidly between banking fraud, health care fraud, property-casualty fraud and disability fraud as they follow the money,” he said.

The evolution reflects fraudsters’ adaptation to industry countermeasures. Where they once focused on exaggerated injuries with expensive surgeries and inflated medical bills, modern schemes have shifted toward exploiting automated systems. Criminals now target low-touch or no-touch claims that are automatically processed due to their low value, submitting thousands of small bills that generate substantial illicit profits, in many cases without triggering a manual review.

Emerging threats in the digital realm pose particularly complex challenges. Fraudsters create completely synthetic companies and file workers’ compensation claims using stolen identities, supported by fabricated medical records. The advancement of AI technology has enabled the creation of fake photographs, documents, MRI films and x-rays that are increasingly difficult to detect.

In the cargo sector, theft patterns correlate closely with economic conditions, typically increasing during recessions. These crimes follow predictable seasonal patterns, with toys frequently targeted during Christmas and electronics stolen leading up to major sporting events; the Super Bowl being a prime example.

Technology as Both Weapon and Shield

Matt Murphy, head of Special Investigations & Anti-Fraud Solutions, The Hartford

Insurance companies are deploying sophisticated technological defenses to combat increasingly advanced fraud schemes. The Hartford and other carriers are implementing data science models and AI-driven approaches to identify suspicious claims and remove them from automated processing pipelines. The technology focuses on behavioral analytics and modeling to flag potentially fraudulent activities.

However, AI technology isn’t foolproof. While AI systems can flag suspicious claims, human analysts make the final determination on whether fraud is actually present. This hybrid approach recognizes both the power of automated detection and the irreplaceable value of human judgment in complex fraud investigations.

The industry is in an ongoing technological race as fraudsters leverage the same AI capabilities that insurers use for detection. Companies are working with internal data science teams or external vendors to develop capabilities for detecting fraudulent documents and media.

“Currently, we can examine a deep fake video or photograph and often identify that something doesn’t look right,” Murphy noted. “We are already developing countermeasures to stay ahead of increasingly convincing digital deceptions.”

Collaborative Prevention Through Customer Education

Beyond technological solutions, insurers are taking a consultative approach to fraud protection. At The Hartford, Murphy’s team proactively educates claim professionals and advises customers on strategies for managing fraud risk.

This partnership model involves comprehensive customer education about how fraud happens and warning signs to monitor for. The Hartford, through ongoing data analysis of claims, can detect specific issues or anomalies that may signal risks to certain customers.  When that happens, the Hartford engages directly with the customer to investigate claims more thoroughly.

In some cases, this collaboration extends to placing investigators directly within a customer’s facilities. Murphy described a case where investigators were stationed at a manufacturing plant undergoing problems, allowing immediate investigation when losses occurred. These investigators’ familiarity with the building, structure and job functions enabled them to effectively verify whether claimed incidents actually occurred.

For cargo customers, The Hartford’s proactive engagement focuses on rapid detection and recovery strategies. By analyzing theft data, insurers can identify hotspots and advise drivers to avoid specific locations where incidents frequently occur. Some carriers also work with customers to implement appropriate security measures, from recommending proper trailer locks to installing tracking devices and cameras.

Being vigilant about fraud actually protects the customers, Murphy said. That ultimately helps to control premiums and maintain business operations integrity.

To learn more, visit thehartford.com/specialization.

The information provided in these materials is intended to be general and advisory in nature. It shall not be considered legal advice. The Hartford does not warrant that the implementation of any view or recommendation contained herein will: (i) result in the elimination of any unsafe conditions at your business locations or with respect to your business operations; or (ii) be an appropriate legal or business practice. The Hartford assumes no responsibility for the control or correction of hazards or legal compliance with respect to your business practices, and the views and recommendations contained herein shall not constitute our undertaking, on your behalf or for the benefit of others, to determine or warrant that your business premises, locations or operations are safe or healthful, or are in compliance with any law, rule or regulation. Readers seeking to resolve specific safety, legal or business issues or concerns related to the information provided in these materials should consult their safety consultant, attorney or business advisors. All information and representations contained herein are as of September 2025.

The Hartford Insurance Group, Inc., (NYSE: HIG) operates through its subsidiaries, including underwriting company Hartford Fire Insurance Company, under the brand name, The Hartford®, and is headquartered at One Hartford Plaza, Hartford, CT 06155. For additional details, please read The Hartford’s legal notice at www.TheHartford.com. © September 2025 The Hartford.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with The Hartford. The editorial staff of Risk & Insurance had no role in its preparation.