Fraudulent insurance claims are costing UK insurers an average of £84,000 per fake claim, with one in seven claims found to be fraudulent, according to research published by financial technology platform Adyen on Monday.
The company’s 2025 Insurance Report found that 90% of insurers estimate fraud accounts for an average of 2.6% of annual revenue losses, with some reporting losses as high as 5%. The research surveyed 200 senior decision-makers at UK insurance firms and 2,001 consumers between September 18 and 22.
More than half of insurers (53%) reported that fraudsters’ use of artificial intelligence has made attacks harder to prevent. The sector’s reliance on outdated infrastructure compounds the problem, with 53% of insurers acknowledging that their legacy payment systems limit fraud detection capabilities. Just over half (52%) continue to rely heavily on manual claims processing.
“Legacy systems are eroding insurers’ margins. Many still rely on cheques and bank transfers, slowing payouts and frustrating customers who expect instant service,” said Adrian Davis, commercial leader for financial services and insurance at Adyen. “Meanwhile, AI-driven fraud is exploiting these outdated systems.”
The report also highlighted consumer financial strain caused by delayed payouts. Nearly one quarter (22%) of policyholders said they had incurred debt while awaiting claim resolution. The issue disproportionately affects younger consumers, with 36% of Generation Z and 31% of Millennials reporting they borrowed money whilst waiting for insurance funds.
Slow payment processing is undermining customer retention, with 58% of insurers admitting that delayed claim payouts contribute significantly to customer churn. Both insurers and consumers identified the typical payout period of one to four weeks as insufficient for meeting current expectations.
Looking ahead, 58% of insurers cited meeting customer demand for instant claim payouts as a primary challenge over the next five years.
“Today’s policyholders judge insurers by how quickly money moves, not just whether it moves,” Davis said.
The research was conducted by Censuswide, which follows Market Research Society standards and ESOMAR principles. The insurer survey included 100 respondents from large-scale insurers with 1,000 or more employees and 100 from mid-market firms with 250 to 999 employees. The consumer survey included respondents aged 18 and older who held at least one type of insurance.
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