InsurTech Under Threat: Unmasking Fraud in the Era of Smart Insurance Platforms

Abstract

The fusion of insurance and technology—InsurTech—has dramatically streamlined claim settlement, policy issuance, and customer onboarding through innovations such as AI, blockchain, and digital KYC systems. However, this digital leap has also introduced an array of security vulnerabilities and complex fraud patterns ranging from deepfake claims to algorithmic manipulation of underwriting models. This study explores how smart insurance platforms are both targets and enablers of fraud, analyzing global fraud data trends, interviews with compliance officers, and technical reviews of 12 leading InsurTech startups across the US, India, and the UAE. Findings suggest that while blockchain-based timestamping and automated risk flagging reduce fraud exposure by over 35%, platforms lacking robust explainability and identity verification protocols are at greater risk of reputational and financial damage. The paper advocates for a unified "Digital Fraud Governance Framework" that integrates RegTech oversight, AI transparency standards, and layered authentication to foster resilience in next-generation insurance platforms.