A generational divide over digital insurance fraud is stark: 55% of Gen Z consumers and 49% of millennials say they are at least somewhat likely to make a small, rule-bending edit to a claim photo or document, compared with just 12% of baby boomers, according to Verisk’s 2026 State of Insurance Fraud study.

The findings, drawn from parallel surveys of 1,000 U.S. consumers and 300 insurance claims professionals, paint a picture of an industry grappling with AI-fueled manipulation that is becoming increasingly mainstream — and increasingly difficult to detect.

AI Tools Make Fraud Accessible to Everyday Policyholders

Digital manipulation is no longer a niche concern, Verisk said. Fifty-seven percent of consumers reported having used AI editing tools, primarily on smartphones, and nearly half of those users described the results as “very realistic,” the study found. The ripple effects are already visible in insurance: more than 60% of consumers believe people use AI to manipulate insurance claim documents often or very often.

Personal exposure to this behavior is common, particularly among younger demographics, the report said. Sixty-four percent of Gen Z respondents and 54% of millennials said they know someone who has used AI editing tools to alter or create a photo, video or document for financial gain — whether in insurance claims, product returns or online sales. That figure drops to 31% for Gen X and 15% for baby boomers, according to the report.

On the carrier side, 98% of insurers agreed that AI-powered editing tools are driving a rise in digital media fraud, and 76% said claim submissions have grown more sophisticated in the past year, Verisk found.

A Blurry Ethical Line

While 65% of consumers said it is unacceptable to make damage look worse in a claim photo, and 63% agreed that altering a photo or document is a serious issue regardless of dollar amount, actual willingness to bend the rules tells a different story, according to Verisk. More than a third — 36% — said they would be at least somewhat likely to make a small edit to strengthen a claim, even if doing so breaks insurer rules.

Consumer attitudes toward specific types of edits reveal a wide gray area. Fifty-two percent of respondents said adjusting brightness or contrast to make damage easier to see is acceptable, while 41% approved of flipping, rotating or repairing a blurry image. More troubling for the industry, 15% said exaggerating damage is acceptable, and 13% said the same about creating a photo of damage that never occurred, according to the study.

Insurers appear aware of this disconnect. More than half — 53% — believe that at least half of policyholders who alter claim photos or documents do not realize their edits may qualify as fraud, Verisk found.

Detection Confidence Has Limits

Carriers are investing heavily in countermeasures, the report said. Sixty-five percent use automated third-party or vendor-provided AI detection tools, and 100% of insurers surveyed said they have taken at least one action in response to digital media fraud, the report said. The most common steps include increasing internal training (54%) and establishing new guidance for adjusters handling suspicious media (51%).

Yet confidence in detection is uneven. While 58% of insurers said they are very confident in spotting edits to real photos or videos, only 32% expressed the same level of confidence in identifying deepfakes. And 66% of insurers acknowledged that digital media fraud goes undetected “often” or “very often,” a figure that climbs for the highest-volume carriers, according to the study.

Persistent challenges include insufficient integration between fraud tools and existing claims systems, cited by 39% of insurers, and a lack of cross-carrier visibility into suspicious images or documents, cited by 34%. Industry data-sharing efforts remain a weak point — only 27% of insurers described cross-carrier sharing of suspicious media data as “strong and highly effective.”

The downstream effects could be significant for policyholders, according to Verisk. Sixty-nine percent of consumers said they believe fraudulent claims will raise premiums for everyone, and 42% cited higher premiums for honest customers as their top concern about AI-driven fraud.

Looking ahead, 48% of insurers expect greater regulation and higher technology adoption, while 45% anticipate stricter documentation and proof-of-loss requirements within the next three to five years, Verisk found.

Obtain the full report here. &