Tighter Enforcement Driving Rising Auto Insurance Fraud Numbers, Experts Say

Insurance fraud cases are increasing nationwide. But the higher number is likely due to stronger enforcement and better detection rather than just more crime, experts say.

The Virginia State Police’s Stamp Out Fraud program, for example, reported a 72% increase in investigations from 2024 to 2025. This whopping year-over-year jump seems to support insurers’ and regulators’ concerns that auto insurance fraud may be on the rise.

Auto insurance fraud — whether vehicle theft or staged accidents — already costs U.S. consumers billions of dollars annually, experts say.

A widespread effect

The state of New York saw a 16% increase in suspected motor-vehicle fraud cases in 2024, according to the state’s Motor Vehicle Theft and Insurance Fraud Prevention program’s annual report. The report noted authorities logged 44,361 incidents of suspected motor vehicle insurance fraud with the New York State Department of Financial Services Insurance Frauds Bureau in 2024.

Officials in New Jersey and Michigan have also reported an increase in staged accidents and organized insurance fraud.

This trend isn’t limited to the U.S. In Canada, property and casualty insurer Aviva reported a 14% increase in fraud claim investigations in 2024. The insurer investigated more than 12,700 cases, many of which were linked to organized auto-related schemes.

A new crime wave or better enforcement?

Is this a new, dramatic crime wave? Not quite, according to state and industry officials. Instead, they say the increase in cases is partly due to better enforcement and detection.

In Virginia, the Stamp Out Fraud program has increased resources for tips, referrals, and investigations, which can drive annual numbers to fluctuate even if actual fraud rises only slightly. The State Police fraud program’s 2024 annual report highlights outreach, improved data collection, training, and case numbers.

In nearly every state mentioned, officials say that more public outreach, better tip reporting, and closer collaboration with insurers are major drivers of the rise in investigations. This can cause significant year-over-year jumps in cases — especially if a team discovers an organized fraud ring, which can reveal many related claims.

The California Department of Insurance reports that criminal convictions for insurance fraud have increased by 23% over the past three years, “which reflects stronger enforcement efforts.”

National regulators and industry groups note that new methods of reporting and flagging suspected fraud can increase the number of investigations.

The National Association of Insurance Commissioners (NAIC) said it recently created the Online Fraud Reporting System (OFRS), “through which consumers and insurers can electronically report suspected fraud to the appropriate insurance department.” OFRS provides “one central, online portal to report suspected fraud to one or more states.”

Technology’s expanding role in fraud detection

Regulators say that almost all insurers now use anti-fraud technology to identify suspicious claims, resulting in more referrals to state investigators. These changes suggest that more investigations may come from closer scrutiny and easier reporting, not just from increased fraud.

“Technology is playing a bigger role in addressing fraud, as insurers rely less on traditional methods and more on predictive modeling, link analysis, and artificial intelligence,” according to the NAIC.

Aviva attributed its rise in cases to its investment in people, technology, and improved investigation techniques.

“Our ongoing investment in advanced analytics, machine learning models, and continuous training for our people has significantly improved our fraud detection rates,” Aviva’s report stated. 

A recent study by the Insurance Information Institute found that 80% of respondents to a member survey use predictive modeling to detect fraud, up from 55% in 2018.

Law enforcement agencies are also updating how they track, sort, and report fraud. Some states that previously recorded fraud cases informally, or grouped them with others, now count them separately, which can make it appear case numbers are growing.

Recently, much of the enforcement effort has focused on staged crashes and exaggerated injury claims by organized groups, which can greatly increase the number of investigations.

States like New York and New Jersey have warned about organized crash rings that target busy roads, use several vehicles, and recruit people to pose as innocent drivers or passengers. When insurers and authorities detect these schemes, they often uncover networks of claimants, medical providers, and repair shops, which increases the number of investigations.

Rising costs create both opportunity and incentive

Economic pressures may also be driving more fraud, which helps explain the broader financial environment behind these trends.

Auto insurance premiums have gone up a lot in the past two years because of higher car prices, repair costs, and medical expenses. When premiums rise, insurers often see more “soft fraud,” like exaggerated damage claims, inflated repair bills, or false information about how a policyholder uses a vehicle.

Soft fraud typically involves smaller amounts than organized crash schemes. But these claims can still generate many referrals — especially as insurers use better analytics to spot suspicious patterns.

At the same time, identity theft and fake identities have made it easier to run insurance scams. Industry groups warn that more fraudsters are using stolen or fabricated identities to open policies, file claims, and avoid detection.

What’s next? What this means for drivers

Regardless of the reason, increased fraud enforcement affects policyholders in real ways.

Insurance fraud raises costs for everyone, including policyholders. At the end of 2025, the national average cost of full-coverage car insurance was $2,144 per year, according to Insurify’s Insuring the American Driver report. Industry estimates say fraud adds hundreds of dollars to the average household’s premiums each year, especially for auto insurance. 

Stopping organized schemes can help keep rates steady over time. But stricter enforcement may also require more careful review of legitimate claims, which could directly affect consumers.

Consumers may see more document requests, longer investigations, and greater use of recorded statements and data checks. Experts say the best protection is transparency: Provide accurate information, document losses carefully, and avoid exaggerating claims, even inadvertently.

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