Identity theft is becoming one of the fastest-growing threats to the insurance sector, with the National Insurance Crime Bureau (NICB) warning that cases involving fraudulent use of stolen or fabricated identities are set to rise nearly 50% by the end of 2025.
An NICB review of questionable claims filed between 2022 and mid-2025 found a sharp increase in identity-related fraud. Nearly a quarter of those cases involved synthetic identities, or fabricated personas built from a mix of real and fake data, such as Social Security numbers, names, emails and dates of birth. According to AARP, these schemes contributed to more than $47 billion in losses last year.
Traditional identity theft, which involves using a victim's personal information directly, has given way to synthetic identity fraud, which is harder to trace and resolve.
“This complexity gives criminals much more time to run the schemes, collect money and get away with it,” said Ian Laughlin, NICB’s director of data sciences. “Ultimately, the cost of this fraud is directly passed along to the consumer.”
The fraud extends across multiple insurance lines. NICB said stolen or synthetic identities are often used to file false medical claims, reroute cargo or pose as beneficiaries to collect life insurance payouts. Other schemes include fake renters' policies and vehicle financing scams, all of which expose insurers to growing losses.
NICB president and CEO David Glawe (pictured above) said that artificial intelligence and digital platforms have made it easier for criminals to generate convincing false identities. In response, NICB is piloting machine-learning tools designed to flag anomalies, such as multiple birthdates linked to the same Social Security number, to help insurers identify fraudulent claims earlier.
Consumer safeguards also remain essential. NICB urged individuals to lock their credit reports, use strong and unique passwords, enable two-factor authentication, and limit carrying sensitive documents like Social Security cards.
Industry analysts said the rise in identity-driven fraud will put more pressure on insurers to invest in detection technology and share intelligence across the sector. Without stronger prevention, they warned that policyholders could face higher premiums as losses mount.
