Travel insurance fraud: Challenges and solutions

18 March 2025 / 4 min read

Travel insurance fraud is a real challenge for the industry, fuelled by fragmented systems, opportunism, and ingrained vulnerabilities. With high financial risks and many stakeholders, insurers are turning to new solutions.

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Travel insurance incorporates elements of several insurance lines, including health, motor, and contents, among others—all with the added layers of multiple stakeholders, international currencies and languages, and potentially high financial exposure.

This multifaceted nature, particularly for such a low-cost product, makes the travel insurance market vulnerable to fraud, though emerging technologies and solutions are helping insurers combat it.

Understanding the problem

“Travel insurance fraud has been an issue for the industry for many years,” says Kaye Sydenham, product manager for anti-fraud, Claims UK at Verisk. Unlike other sectors, such as motor, travel has no unified database that consolidates claims across insurers. This makes it possible for individuals to submit the same claim to multiple insurers without detection.

Additionally, travel insurance is a low-premium, high-volume product that is typically distributed digitally. “That introduces risks at multiple stages,” adds Rachel Edwards, global managing director of Life, Health & Travel at Verisk, “from misrepresentation during the sales journey to fraud in the claims process.”

Claims can range from low-cost incidents, such as lost luggage, to high-stakes health emergencies. The latter make travel insurance an exceptionally valuable product for policyholders, as the costs of an international medical episode can be truly life-altering for their health and finances—while premiums in this line are relatively low.

Fraudulent claims and misrepresentation

Paradoxically, the ease of access to travel insurance can lower the psychological barriers for policyholders committing fraud. Some consumers, swayed by the low cost and accessibility of policies, may downplay or omit details about their health or travel plans and think little of it.

This points to an education gap, with some policyholders failing to grasp the considerable value of insurance coverage while they’re overseas.

“If you're found to have misrepresented your circumstances, you may not be covered. Essentially, you're just kicking the risk down the road to a moment when you’re most vulnerable,” says Edwards.

“I've seen cases where people have had to remortgage their homes. This kind of financial trauma, on top of the trauma of a medical emergency, can be devastating.”

Opportunistic fraud, such as inflating the value of lost items, is another challenge. Sydenham says such fraudsters are particularly difficult to detect without a data footprint to pin down the behaviours and history of the claimant.

More alarming are cases involving systemic claims fraud. Edwards explains: “The claims process involves many parties—medical facilities, air ambulance providers, on-the-ground assistance companies, to name just a few—and each step is susceptible to manipulation. This fragmented system creates opportunities for inflated costs or exposure to fraud in multiple areas.”

Examples include medical providers overcharging for treatments, overtreatment of insured patients, or billing for services that never were provided. Insurers may have to dispatch investigators to verify claims on the ground, sometimes uncovering that the facilities in question don’t even exist.

Solutions and innovations

Insurers are increasingly turning to technology to combat fraud, and travel insurance is no exception.

Digital Media Forensics (DMF) is one tool, helping insurers identify manipulated documents and images submitted to support claims. “DMF doesn’t find fraud, per se—it flags potential fraud,” says Sydenham. “The real benefit is that it speeds up the processing of genuine claims, improving the experience for the majority of customers who make valid claims.”

Over time, collating data from these digital tools can create a knowledge bank similar to the fraud database that is absent from travel lines—although it’s not usually shared by multiple providers. The resulting algorithms can flag unusual activity. “For example, if a facility prescribes MRIs for half its patients or consistently charges five times the standard cost of a medication, it’s likely worthy of investigation,” Edwards says.

Keeping consumers at the core

Despite these efforts to address fraud, it is important not to lose sight of the customers, particularly those who require support at a vulnerable time.

“The consumer must remain at the centre of it all,” Edwards says. “For genuine claimants in stressful situations, the insurance process should provide relief, not extra hurdles.”

The solution to travel insurance fraud requires collaboration, technology, and a consumer-first approach. While the industry continues to face challenges, advancements in detection and prevention methods offer a more secure and efficient fraud detection system that puts policyholders first.

Explore Verisk's ever-evolving anti-fraud solutions and how we are advancing the travel insurance industry.