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Published by Property Casualty 360

The hype around ChatGPT and other artificial intelligence is hard to escape. The importance of learning the risks and advantages of artificial technology cannot be understated. This is especially true for the insurance industry, where insurance companies are integrating AI into the claims process. Indeed, AI may be both a source of insurance fraud and a manner in which to detect and prevent it.

What is ChatGPT?

ChatGPT — perhaps the most well-known AI program — is an AI chatbot that uses natural language processing to respond to questions and compose various written content in a conversational fashion. When given a prompt, ChatGPT generates text responses based on its knowledge, which it derives from a diverse collection of text from the internet, generated by millions of users worldwide. The newest version of ChatGPT and other forms of generative AI also have the ability to create and manipulate images.

Friend and  Foe

Insurance fraudsters are no stranger to AI. Indeed, the use of AI in facilitating fraud claims has steadily increased over the last decade, consistent with advances in technology. Now that ChatGPT and other forms of generative AI are readily available to the general public, insurers should be aware of how this technology can be used to both support and guard against fraudulent insurance claims.

ChatGPT is an expert storyteller. It has the ability to take a simple prompt and weave it into a compelling tale. It can thus serve as a useful tool for someone who wants to exaggerate, or even fabricate, an insurance claim. Insurance fraudsters may also utilize ChatGPT and other generative AI to generate fake documents and photographic evidence to support a fraudulent claim. ChatGPT and other forms of AI are also excellent data aggregators, because they can produce succinct, seemingly believable output from nearly unlimited sources of data — a dataset that continues to grow each day through user inputs and machine learning. Insurers should thus be on high alert for AI-assisted fraudulent claims.

At the same time, insurers should also consider how ChatGPT and other AI tools might assist in detecting and flagging fraudulent claims. Some generative AI tools have the ability to detect AI-generated content, especially large volumes of content, and thus have the potential to detect the AI-assisted fraudulent claims discussed above.

Additionally, because ChatGPT uses natural language processing to detect patterns in conversations, it has the potential to analyze conversations between customers and agents and detect suspicious and potentially fraudulent behavior. In this way, ChatGPT and generative AI can be useful tools for detecting fraud before it occurs. Further, AI tools are cost-effective because they can review a significant amount of data in a significantly shorter time than human reviewers.

As generative AI continues to advance, so will its ability to detect and flag fraudulent claims — even those that are AI-created. By utilizing AI technology and staying a step ahead of fraudsters, insurance companies can substantially reduce their losses associated with fraudulent claims.

Adams and Reese recognizes both the dangers and benefits of AI, and is continually monitoring its growth to effectively address your concerns.

About Our Authors:

Alex Lamb  Billy Wright

Alex Lamb is an Associate in the Adams and Reese Litigation Practice Group, practicing in the firm's New Orleans office. Her experience is diverse, representing clients in general litigation, appellate, insurance defense and coverage disputes, energy and environmental litigation, complex litigation, and labor and employment disputes. Alex is a member of the firm’s appellate, insurance, and labor and employment teams.

Billy Wright is a Partner in the Adams and Reese Litigation Practice Group, practicing in the firm's New Orleans office. Billy focuses on general insurance defense, professional liability, management liability, and employment law. He devotes the remainder of his practice to a wide array of litigation, including contract disputes, business torts, and disputes pertaining to successions, wills, and trusts. Billy has been recognized among Louisiana’s Super Lawyers “Rising Stars” and Best Lawyers “Ones to Watch.”