Adyen: Fraud Insurance Claims Average £84,000 per Incident

Insurance companies are battling fraudulent claims that cost an average of £84,000 per incident, new research from Adyen reveals. The payment platform's 2025 Insurance Report found that one in seven claims submitted to insurers turns out to be fraudulent.

The study shows that 90% of insurance businesses estimate fraud accounts for around 2.6% of their annual revenue, with some firms seeing losses as high as 5%. This fraudulent activity ranges from staged accidents to inflated claims.

"Legacy systems are eating into insurers' profit margins," explains Adrian Davis, Commercial Leader for Financial Services and Insurance at Adyen. "Many still rely on cheques and bank transfers, which slow down payouts and frustrate customers expecting instant service. Meanwhile, AI-driven fraud is exploiting these outdated systems."

AI makes fraud harder to detect

More than half of insurers say fraudsters using AI have made attacks harder to prevent. The report found that 53% of insurance companies admit their legacy payment infrastructure hampers fraud detection, while 52% still depend heavily on manual claims processing.

Davis suggests insurers can tackle these challenges through modernisation. "By adopting real-time, embedded payment solutions, insurers can automate verification, speed up legitimate claims and deliver the seamless experience customers expect," he says.

The sector recognises that current systems leave firms exposed as fraudsters deploy increasingly sophisticated AI-driven attacks. Insurance companies need to embrace advanced AI capabilities to counter these emerging threats, the report concludes.

Payout delays push customers into debt

The research also highlights a parallel problem affecting customer finances. Twenty-two percent of consumers report going into debt while waiting for claim payouts, with younger policyholders hit hardest. The data shows 36% of Gen Z and 31% of Millennials borrow money whilst awaiting insurance payments.

These delays are damaging insurer-customer relationships. Fifty-eight percent of insurance companies acknowledge that slow claim processing drives customer churn. Both insurers and consumers agree that the typical one-to-four-week payout period falls short of current expectations for speed and convenience.

The financial impact on consumers extends beyond mere inconvenience. Policyholders facing delays often turn to credit cards or personal loans to cover expenses that insurance should handle, racking up additional costs through interest payments.

Infrastructure overhaul needed

Looking ahead, 58% of insurers identify meeting customer demand for instant claim payouts as a primary challenge over the next five years. The report suggests that reimagining money flows across the insurance value chain could reduce friction between purchase, claim and payout processes whilst improving fraud risk management.

The research indicates that effective solutions require infrastructure upgrades allowing fraud detection to integrate directly within payout processes. Insurance companies need systems that match customer expectations shaped by experiences in retail and fintech sectors.

"Today's policyholders judge insurers by how quickly money moves, not just whether it moves," Adrian says. "This gap represents an opportunity for innovation."