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AI’s Growing Role in Fraud and Prevention

Authors

Russ Anderson, CFE
Head of Fraud Prevention and Compliance Solutions
LIMRA and LOMA
randerson@limra.com

Tamara Williams
Director of Compliance Solutions
LIMRA and LOMA

November 2026

Fraud prevention and compliance have evolved from operational functions into strategic business imperatives. As artificial intelligence (AI) reshapes how customers interact with financial institutions and how fraudsters launch attacks, insurers and financial services organizations must continuously adapt their risk management, governance and workforce strategies to protect customer trust and organizational resilience.

AI continues to play a central role in this conversation — both through AI-enabled fraud schemes and as a tool to combat fraudsters and meet compliance regulations. Understanding how AI can be leveraged in the fight against fraud while also recognizing the harm it has and will continue to cause is imperative to set your organization up for success within our industry.

AI-Enabled Fraud 

It’s no secret that AI is being used to scam and attack many aspects of the financial services industry — through phishing attempts, call scams, account takeovers (ATO) and more. LIMRA research shows the increase in attacks using AI has more than doubled in one year. In fact, reports of AI-generated contact jumped from 25% to 59% in a single year.

AI-enabled fraud only continues to become more sophisticated, but organizational budgets are still treating AI as an incremental investment, opening a widening window for capability gaps. If organizations are not properly investing in tools to increase AI functionality, they could fall behind in adopting fraud-fighting capabilities. Combating fraud has historically required organizations to continually adapt to increasingly sophisticated threats. Today, the widespread availability of AI-powered technologies has significantly lowered the barriers to entry, enabling even inexperienced fraudsters to access advanced capabilities. As a result, the industry must accelerate its investments in detection, prevention and response strategies to remain effective against emerging risks.

Identifying attacks utilizing AI and account takeover have dominated the fraud landscape in 2026, leading to an intense push for organizations to focus on stronger authentication controls and AI-enabled detection and prevention capabilities. As of midyear, there have been over 3,500 ATO fraud incidents reported, with most incidents being detected by employees and/or internally developed reporting and analysis. Reliance on employees as a primary line of defense against fraud is no longer a sustainable long-term strategy. As bad actors increasingly leverage advanced technologies and AI-driven tools, organizations must adopt more sophisticated and automated fraud prevention capabilities to keep pace with evolving threats.

These attempts are happening largely through the customer portal, with call centers as the next most popular choice, both of which can quickly succumb to AI-fraud attacks. Because of this, it’s imperative that organizations understand how to spot the risks and know what actions to take to spot, report and combat fraud.

Compliance Leads to Protection

Ensuring your employees are meeting all requirements and adequately trained in the latest topics and trends will help them better fight financial crime and recognize fraudsters. Repetition through education is often the best way to teach people how to spot potential threats and understand how AI is being used to perpetuate fraud attacks. Training for employees has been strong. In fact, 98% of companies require employee fraud awareness training, underscoring the importance of education on this topic.

AI can and is being used to help meet compliance standards and protect companies against money laundering, account takeovers and other fraud schemes. As compliance regulations continue to evolve and expand to meet the needs of organizations in an increasingly AI-driven world, staying up to date on compliance training will be essential to setting teams up for success, supporting organizational goals and enhancing customer satisfaction.

AI tools and methods can deliver enhanced analytics, faster detection times and more thorough investigations. Effective compliance in the age of AI requires more than workforce training. Organizations should establish governance frameworks that define acceptable AI use, oversee model performance, ensure transparency and monitor emerging regulatory requirements. These controls help organizations realize AI's benefits while mitigating operational, ethical and compliance risks.

Working Together 

Despite AI's growing capabilities, technology alone cannot eliminate fraud risk. Successful fraud prevention programs combine advanced analytics with human judgment, investigative expertise and cross-functional collaboration. AI can identify suspicious activity faster and at greater scale, but experienced professionals remain essential for validating findings, interpreting context and making risk-based decisions.

International Fraud Awareness Week, happening Nov. 15–21, serves as an important reminder that reducing fraud requires working together to raise awareness and promote education and training on how to identify and combat potential fraud schemes.

LIMRA and LOMA is at the forefront of understanding how fraud attacks evolve and helping organizations recognize and prevent fraud schemes through education, compliance training and continuous reporting. Whether you utilize FraudShare, now partnered with Verisk to provide enhanced reporting and analytics, complete a compliance course or enroll in Industry Advantage fraud prevention learning path, these resources can help strengthen fraud awareness and prevention efforts.

The Way Forward

As fraud schemes become increasingly sophisticated, the life insurance and financial services industry must leverage both human expertise and artificial intelligence to stay ahead of fraudsters.

By combining education, awareness and AI-powered technologies, organizations can strengthen their defenses against emerging threats. AI can help prevent fraud by detecting suspicious activity in real time, supporting compliance monitoring, enhancing employee training through personalized learning and equipping teams with intelligent tools to identify potential risks before losses occur. Organizations that will be most successful in combating AI-enabled fraud will be those that view AI not simply as a powerful tool, but as part of a broader strategy encompassing governance, data intelligence, compliance and customer protection.

 

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