Insurance Fraud Detection Market to Reach $28.1 Billion by 2031
The insurance fraud detection market is projected to grow from $3.3 billion in 2021 to $28.1 billion by 2031, at a compound annual growth rate of 24.2%. Artificial intelligence and data analytics are key drivers.
The market for insurance fraud detection is expected to experience substantial growth in the coming years. According to a report by Allied Market Research, the market size was valued at $3.3 billion in 2021 and is estimated to reach $28.1 billion by 2031, with a projected compound annual growth rate of 24.2% from 2022 to 2031.
Insurance fraud encompasses a range of improper activities aimed at obtaining undue benefits from insurance companies. These can include staging incidents, misrepresenting circumstances, or exaggerating the extent of damages. Detecting fraud is a challenging task due to the variety of fraud patterns and the relatively small ratio of known frauds. Machine learning and data analytics techniques are employed to improve predictive accuracy and reduce false alerts.
In the U.S. alone, the insurance industry receives over $1 trillion in premiums annually. The FBI estimates the annual cost of non-health insurance fraud to be over $40 billion. Insurance fraud is not a victimless crime; losses result in increased premiums for all policyholders and erode trust in claims processes.
Among application segments, payment and billing fraud detection is expected to grow the fastest. Regionally, the Asia-Pacific sector has seen the most significant growth, driven by digitalization. The COVID-19 pandemic saw an increase in insurance fraud, with investigations shifting increasingly to digital channels, accelerating the adoption of artificial intelligence to combat these illicit activities.