Insurance Fraud Reaches Billions as Traditional Detection Methods Miss Majority of Clues

Insurance claims fraud resulted in over $300 billion in losses during 2023, yet traditional fraud detection methods analyze only 5% of open injury claims, according to Carpe Data’s 2025 online fraud report.

In contrast, through continuous online monitoring of open injury claims across auto, workers’ compensation, general liability and disability lines, Carpe Data determined that an average of 8% contained fraudulent elements that had never been flagged by internal fraud models or adjuster referrals.

“These alerts weren’t just vague signals or ‘maybe’ moments. They included captured videos, public posts, and online affiliations that directly contradicted the claimed severity, activity limitations, or work status of the claimant,” according to the report.

Geographic and Demographic Patterns Reveal Fraud Hotspots

Carpe Data’s report found significant geographic variations in injury fraud activity. Connecticut had the highest claims fraud rate at more than 3% per 100,000 residents, followed by New York at 2.7%. Nevada, South Carolina and Georgia also demonstrated elevated fraud rates when adjusted for population size.

Notably, major states like California, Texas and Illinois did not rank in the top 20 for fraud rates, suggesting that population size alone doesn’t predict fraud prevalence, the report noted.

At the city level, Las Vegas ranked first for incidence of fraudulent injury claims, despite its smaller population compared to Jacksonville and Los Angeles, which held the second and third positions, respectively. The presence of multiple New York boroughs in the top 20 ranking of cities for injury fraud reinforced patterns of urban fraud concentration.

Demographics also play a crucial role in fraud patterns. Younger claimants aged 18-24 are far more likely to trigger physical activity and unlawful activity-related flags than people over 35, likely due to riskier behaviors and cultural pressure to overshare on social media platforms like Instagram and TikTok, according to the report.

Meanwhile, claimants aged 34 and older tend to publicly discuss their illness, pain or injuries, sometimes reinforcing their claims but other times directly contradicting them. Adults aged 50 and older are particularly likely to use Facebook to share details that support or contradict claims, the report noted.

Detection Methods and Industry Impact Vary by Line

Different lines of business showed distinct fraud patterns and detection rates, the report noted. Disability claims generated the highest referral rate to Special Investigation Units at 8.9%, followed by workers’ compensation at 6.9% and auto claims at 5.7%.

The nature of contradictory evidence also varied significantly across business lines. For disability and workers’ compensation injury claims, 54% and 59% of flagged content respectively involved claimants’ associations with a business, suggesting undisclosed employment or side business activity, Carpe Data found.

Auto injury claims fraud evidence appeared more connected to travel (37.1%) and physical activity patterns (34.2%) that contradicted reported injuries.

Strategic Implications for Insurers

Rather than relying on point-in-time social media checks or waiting for claims to “feel suspicious,” insurers need real-time visibility across multiple data sources and online platforms, the report said.

Carpe Data’s research shows that 35% of all fraud referrals occur in the first two months after a reported loss, with the largest alert rate happening in the same month the injury occurred.

However, nearly 50% of fraud is discovered after month three, with some cases surfacing as late as two years after first notice of loss. This persistent activity reflects life changes as people return to work, launch new businesses or post updates that contradict their original claim narratives, the report explained.

“Many individuals committing fraud don’t see themselves as criminals—they’re often led to believe they’re simply maximizing their claims. Unfortunately, professional injury attorneys who know how to exploit legal loopholes are coaching claimants into exaggerating their injuries, sometimes without them fully realizing the consequences,” stated Tom Rasmussen, vp of claims product at Carpe Data.

Obtain the full report here. &