Artificial intelligence (AI) is reshaping the insurance landscape—but not always for the better. While AI offers powerful tools for underwriting, claims, and fraud detection, it can also be weaponized to exploit vulnerabilities in public filings, policy language, and internal processes. As these tools grow more sophisticated and accessible, P&C insurers must understand how AI can be misused and how to defend against emerging threats.
AAIS hosted the webinar AI Exploitations: How P&C Insurers Can Protect Themselves, featuring insights from Joseph Petrelli, President of Demotech, and Todd Kozikowski, CEO of 4WARN, with Werner Kruck, President and CEO of AAIS, moderating. The session explored operational, legal, and reputational implications of AI-driven threats, giving insurers practical guidance to identify exposure, implement safeguards, and stay ahead of evolving fraud techniques.
Lessons From Insurance Market and Carrier Failures
Petrelli opened the conversation by examining recent trends in claims and litigation, pointing to Florida’s wave of insurer insolvencies in 2020. Several carriers collapsed despite strong financial ratings, adequate reinsurance protections, capital contributions, and unqualified audits. “The safeguards were in place, but the issue was claims, not solvency,” Petrelli explained.
He pointed out that litigation surged to unsustainable levels, overwhelming even well-managed insurers. New technologies accelerated solicitation and claim manipulation, allowing opportunistic actors to reach policyholders faster and at greater scale. What might once have been a localized or manageable challenge quickly cascaded into systemic risk for the market.
Petrelli emphasized that this historical perspective carries an urgent lesson: vulnerabilities in operations and claims handling can undermine carriers regardless of their balance sheet strength. As AI becomes more prevalent, he cautioned, insurers face similar dynamics—only now the risks are amplified by the speed, automation, and reach of digital manipulation.
The Evolution of Fraud with Digital Risk
Digital fraud in insurance has shifted from opportunistic scams to highly organized, scalable operations. Kozikowski explained that one of the most concerning developments is Ghost GPT—malicious, customized AI models sold on the dark web. These tools have effectively created a “fraud-as-a-service” market, enabling even non-technical actors to launch sophisticated attacks.
He noted that by flooding the internet with manipulated content, bad actors can influence multiple AI platforms simultaneously, producing consistent but false responses that shape consumer perception and behavior. “These tools are lowering the barrier to entry for fraud,” Kozikowski emphasized. “Insurers need to understand the external attack surface just as well as their internal systems.” As fraud becomes more organized, AI itself has emerged as a new attack surface for these coordinated campaigns.
AI as a New Attack Surface
AI has introduced entirely new vectors for exploitation. Fraudsters are no longer limited to internal systems—they can manipulate public data, SEO strategies, and digital channels to amplify attacks. From generating fake content to influencing search engine results, AI-enabled threats are faster, more sophisticated, and increasingly difficult to detect.
Kozikowski explained that coordinated fraud campaigns are rarely confined to a single tactic; instead, they operate as layered operations designed to overwhelm insurers from multiple angles at once. He pointed to black hat SEO campaigns as a growing threat, where fraud actors flood search engines with fake websites and keyword-optimized content that impersonate legitimate insurers or legal resources.
At the same time, Kozikowski said, these groups deploy AI-generated articles, reviews, and social posts to reinforce the false narrative, ensuring that consumers and even automated systems encounter consistent—but misleading—information across platforms.
He also noted the rise of coordinated litigation solicitation efforts, where fraud networks use AI-driven digital ads, text campaigns, and robocalls to push policyholders toward opportunistic lawsuits. By automating outreach and scaling rapidly, these campaigns can generate litigation volumes that overwhelm carriers, regardless of their financial strength.
“What we’re seeing is a lifecycle of propagation,” Kozikowski said, “where fraudsters create content, amplify it through multiple channels, and then reinforce it with claims or legal action. The digital ecosystem gives them a playbook to move faster than insurers can respond if we’re not paying attention.” Understanding these external and internal vulnerabilities is critical, and 4WARN has developed strategies to help insurers respond proactively.
Mitigation Strategies and Industry Collaboration
4WARN was founded to help insurers understand and defend against emerging digital threats, focusing on how fraud campaigns spread and take root across the internet. By tracking the propagation lifecycle of fraudulent content and analyzing claims and litigation patterns, 4WARN enables insurers to anticipate and address risks before they escalate. “Our goal is to see the threats early, understand how they’re evolving, and work with the industry to stop them before they cause real damage,” Kozikowski said. Through continuous monitoring, trend analysis, and close collaboration with industry partners, insurers can proactively strengthen their defenses rather than simply reacting after the fact.
Kozikowski also stressed the importance of education and awareness, equipping internal teams to recognize early signs of AI-driven manipulation—such as brand impersonation or black hat SEO tactics, where fraud actors deliberately game search engine algorithms to elevate misleading or malicious content. He pointed to the growing role of third-party litigation funding networks, which can magnify the reach and financial impact of AI-enabled fraud. According to Kozikowski, this evolving threat landscape underscores the need for insurers to adopt proactive, layered defenses and integrate AI risk monitoring into their core risk management frameworks.
Staying Ahead of AI-Driven Fraud
As AI technology continues to advance, so too will the methods of bad actors. Insurers are encouraged to build robust internal governance structures, invest in advanced monitoring tools, and foster industry collaboration. “Understanding the AI attack surface—inside and outside the organization—is essential to protecting operational integrity, compliance, and consumer trust,” Kozikowski concluded. By taking a proactive approach, insurers can safeguard their operations and maintain confidence in an increasingly complex digital environment.
To view the full webinar, click on the video above.
Questions? Please reach out to any of the featured speakers through the contact information below.
Werner Kruck
President & CEO, AAIS
wernerk@aaisonline.com
Joseph Petrelli
President, Demotech
jpetrelli@demotech.com
Todd Kozikowski
CEO, 4WARN
todd@4warn.com
