Average Cost of a Fake Insurance Claim is Around 84K

That’s best estimate from Adyen, who have been researching the costs that insurers face. These can be buying specialised software or services like voice analysis, ID verification systems, private investigators, law firms and much more. Here’s the word;

 Adyen, the global financial technology platform of choice for leading businesses, has found that fraudulent claims are eroding insurer revenues as the average cost of a fake claim hits £84,000. Following these findings, Adyen’s 2025 Insurance Report points to ways insurers could strengthen their response to fraud.

The report exposes the financial impact of fraud on insurers, with one in seven claims proven to be fraudulent (15%). The findings reveal that 90% of businesses estimate that fraud, including staged accidents and inflated claims, accounts for an average reported loss of 2.6% of annual revenue, peaking at 5%.

“Legacy systems are eroding insurers’ margins. Many still rely on cheques and bank transfers, slowing payouts and frustrating customers who expect instant service,” said Adrian Davis, Commercial Leader for Financial Services and Insurance at Adyen. “Meanwhile, AI-driven fraud is exploiting these outdated systems. By adopting real-time, embedded payment solutions, insurers can automate verification, speed up legitimate claims, and deliver the seamless experience customers expect.”

Outdated systems also weaken fraud protection. Over half (53%) of insurers admit their legacy payment infrastructure is limiting fraud detection while just over half (52%) rely heavily on manual claims processing. As fraudsters deploy increasingly sophisticated AI-driven attacks, the sector recognises the need to modernize systems and embrace next-generation AI to stay ahead of emerging fraud threats.

Insurers face increasing pressure to reimagine the claims journey

Slow insurance payouts are also leaving consumers financially exposed, with 22% saying they’ve gone into debt while waiting for a claim to be paid. The issue is particularly acute among younger policyholders, with 36% of Gen Z and 31% of Millennials borrowing money while waiting for insurance funds to arrive.

The findings reveal how payout delays are damaging trust and loyalty across the sector. Over half (58%) of insurers admit that slow claim payouts are a leading cause of customer churn. Both consumers and insurers agree that the typical payout period of one to four weeks is too slow to meet rising expectations for speed and convenience.

Nearly two thirds (58%) of insurers say meeting customer demand for instant claim payouts will be a top challenge over the next five years. Reimagining how money flows across the entire value chain, reducing friction between purchase, claim, and payout, positions insurers to better manage risks associated with fraud.

To effectively address this challenge, insurers must modernize their payments infrastructure, enabling seamless integration of fraud detection directly within the payout process. “Today’s policyholders judge insurers by how quickly money moves, not just whether it moves. This gap is an opportunity for innovation”, said Adrian.