The rapid advancement of artificial intelligence is enabling a new wave of healthcare fraud, with fraudsters leveraging AI to generate fake medical records, create synthetic identities, and inundate insurers with automated calls. This trend is significantly increasing the cost of claims screening and exposing critical gaps in insurance coverage, according to a recent analysis by Gallagher.
Rising Threats and Silent AI Risks
Gallagher has identified a growing concern over policy wordings that neither explicitly include nor exclude AI-related losses, creating what industry experts term 'silent AI' risk. This ambiguity leaves insurers vulnerable to unexpected claims, similar to the early days of cyber insurance when losses were absorbed by traditional policies. The brokerage notes that only about half of AI-related losses are currently fully covered, with 44% partially covered and 3% receiving no coverage at all.
Kurt Spear, vice president of financial investigation and provider review at Highmark, confirmed that the industry anticipated AI being used by fraudsters and is now beginning to see its impact. Highmark is deploying new tools to detect AI-driven fraud, including technology capable of identifying anomalies in medical imaging down to the pixel level.
Call Center Attacks and Financial Impact
The threat is particularly acute in call centers. Pindrop, a security firm whose technology is used by major health insurers, reported that its clients faced 15,000 bot calls in just a few months, according to Jason Barr, Pindrop's vice president of healthcare. While some organizations like UPMC and Pennsylvania's Medicaid agency have not yet seen significant AI-driven fraud, experts warn the risk is not evenly distributed but is spreading rapidly.
Healthcare fraud already costs the industry tens of billions of dollars annually, according to the National Health Care Anti-Fraud Association. The Department of Justice's 2025 national healthcare fraud takedown charged 324 individuals linked to over $14.6 billion in intended losses. Generative AI is now compounding these existing risks.
Liability Landscape Shifting
The liability implications are also evolving. Gallagher reports that businesses in New Zealand are beginning to consider a new type of AI 'silent risk,' mirroring the early cyber insurance market. Datacom research shows that 87% of New Zealand organizations now use some form of AI, up from 66% in 2024 and 48% in 2023. A bad AI outcome could potentially trigger claims across cyber policies, professional indemnity, product liability, employment practices liability, or directors and officers insurance. Gallagher's John Farley warned that increased AI usage could drive both the frequency and severity of claims.
Human Oversight Remains Crucial
Despite the push toward automation, industry leaders emphasize that human involvement remains essential. Algirdas Dineika at WTW told a Health & Protection briefing that insurers still need staff who can work alongside agentic AI. Janette Hiscock, who leads UnitedHealthcare Global's Europe, Middle East and Africa operations, cautioned that 'AI is not infallible, it is hackable.'
However, ramping up screening is not a panacea. Greater AI use can lead to more false positives, slower legitimate claims processing, and raise privacy and fairness concerns. Wide exclusions risk leaving companies with unexpected coverage gaps. Joanne Buckle, principal and consulting actuary at Milliman, noted that AI advances are outpacing organizations' ability to manage them.
Regulatory Response and Market Outlook
Regulators are taking notice. The National Association of Insurance Commissioners published a paper in the Journal of Insurance Regulation revealing that 65% of health insurers are using or planning to use AI or machine learning for fraud detection. The technology is increasingly supporting human decision-making rather than replacing it.
Insurers that can integrate image forensics, voice authentication, and claims analytics with proper clinical review and clear audit logs are likely to gain a competitive edge. As AI becomes a standard tool in claims work and a regular expense, the industry is bracing for a new era where technology both creates and combats fraud.
