AI, digital forensics key tools to combat fake motor insurance claims

KUALA LUMPUR: Malaysian general insurers have deployed advanced digital forensics, artificial intelligence and centralised tracking databases to combat organised crime syndicates and fake claims.

The General Insurance Association of Malaysia (PIAM) said the Fraud Intelligence System (FIS), managed by Insurance Services Malaysia, serves as the industry's primary database, allowing subscribing insurance companies to identify anomalies in claims.

PIAM chief executive officer Chua Kim Soon said insurers were using the FIS alongside new digital tools to counter sophisticated tactics, such as AI-edited crash photos and staged collisions.

"The system now uses specialised algorithms and software to analyse image pixels and metadata, instantly flagging fake photos or recycled images from older accidents," he said.

"To prevent the use of tampered photos, some of our insurance providers are also requesting drivers to submit crash photos through their own Digital Roadside Assistance mobile apps."

Chua said major insurers saved RM65 million between 2023 and last year by deploying the FIS to intercept dubious claims before payouts were made.

He said fraud scenarios ranged from opportunistic acts by individuals, such as exaggerating damage or colluding with third parties to falsify claims, to complex organised schemes involving multiple actors executing staged accidents, self-inflicted crashes, the use of private cars for commercial purposes or chain collisions.

The FIS received 924 fraudulent vehicle claim cases last year. Own damage, third-party bodily injury and third-party property damage were the most commonly reported claim types.

He said fraud investigations resulted in RM41 million in savings last year, up from RM21 million in 2024.

"The increase reflects higher case detection, strengthened validation processes and improved escalation of suspicious claims."

Chua said insurers also cross-verified claims against police reports, weather logs for flood claims and vehicle history databases before sending flagged cases to loss adjusters for physical vehicle inspections.

"Claims are cross-referenced using engine and chassis numbers and weather data, while cases involving suspected criminal syndicates are escalated to the police."

He added that cross-border smuggling had emerged as a critical concern, with commercial pickup trucks being 3.6 times more prone to theft than standard passenger cars.

"To combat these operations, which contributed to RM488 million in theft-related claims in 2025, insurers are partnering with the police and government agencies to monitor jungle borders where stolen high-clearance vehicles are routinely trafficked into Thailand and Indonesia."

He added that insurers also worked with government and non-government bodies to reduce vehicle theft and road accidents. An independent panel of loss adjusters supported these efforts by conducting mandatory interviews, crime scene inspections, travel log checks and financial background audits to verify high-risk theft claims.

At the same time, the insurance industry actively participates in anti-fraud dialogues, sends teams for specialised training and joins executive roundtables to strengthen industry-wide defences.

These platforms allow organisations to share practical threat intelligence, discuss emerging schemes and stay ahead of fraud trends.

Continuous training ensures operational teams can quickly identify red flags, while executive roundtables help leadership align on unified mitigation strategies, which fosters cross-industry collaboration to protect consumers from fraud.