Two weeks ago, Harbor View attended the 2026 Anti-Fraud Alliance (AFA) Conference, which brings together carriers, Special Investigative Units (“SIU”) leaders, analytics providers, and investigators that focus on the insurance fraud landscape. Given our focus on Insurtech, insurance distribution, and specialty finance, we attended to sharpen our perspective on how fraud is reshaping carrier operating models, vendor stacks, and M&A activity.
The headline keynote from Frank Abagnale (reformed con artist turned longtime FBI fraud-prevention advisor, characterized in the “Catch Me If You Can” film) set the opening tone: Annual insurance and financial fraud is a $110 billion problem, ~91% of which is never recouped, and less than 0.05% of cyber-enabled crime is ever prosecuted.
Three takeaways stood out from the sessions and sidebar conversations.
1. California Is Where the Trends Show Up First
Verisk's (NASDAQ: VRSK) presentation on the California Department of Insurance (“CDI”) referrals reinforced why the state remains the leading indicator for national fraud dynamics. California processes roughly 11% of U.S. claim volume and 1 million Claim Search* transactions daily, and CDI referral volumes hit record high in 2025 – up 19% year over year.
For carriers, California is a forward look at where loss ratios in other large states are heading – notable statistics include:
2. AI: The Arms Race the Industry Cannot Afford to Lose
TransUnion's (NYSE: TRU) Ed Tavares framed the AI fraud landscape as an "arms race with no playbook." AI altered claim photos (“Inpainted”), fully fabricated images, deepfake videos, voice cloning ("vishing"), and synthetic identities are now within reach of any fraudster with a free model and a laptop.
The current detection "tells" – inconsistent shadows, off-axis focal points, irregular pixel structure, even the now-popular "wave your hand in front of your face" trick to break a real-time deepfake – were repeatedly described as temporary. As one panelist put it: no detection technique is static, and there is no playbook. The implication for carriers is that fraud-defense capability is no longer a one-time tooling decision; it is a continuous capability investment, much like cybersecurity has become.
3. The SIU Function Has Quietly Become Strategic
Thirty years ago, the claims adjuster was the SIU. Today, 90% of insurers have a dedicated SIU department, and the role has been further reshaped by post-COVID virtualization (e.g. remote depositions, vendor-led investigations, analytics-first triage).
Multiple speakers pointed to a cultural shift as well: generational research suggests rising acceptance of insurance fraud among ordinary policy-holders – not just professional rings – driven in part by a broader decline in self-reported moralism over the last 15 years. The implication is that SIU teams are increasingly defending against two distinct adversaries with very different tooling needs: traditional, professional fraudsters who systematically exploit insurers, and a growing cohort of otherwise honest individuals who opportunistically exaggerate or inflate claims, typically on a smaller, one-off basis.
M&A Implications
From Harbor View's vantage point, the conference reinforced a multi-year theme our Financial Services & Technology team has been tracking: fraud detection, identity verification, claims analytics, and SIU services are converging into a single category of mission-critical insurance infrastructure. Strategic carriers and Insurtech investors are focused on SIU services, fraud analytics, and specialty data.
With volume rising, sophistication compounding, and budgets expanding, we expect M&A activity in this space to continue at elevated levels for 2026 and likely for years to come.
*ISO ClaimSearch is the insurance industry's largest and most comprehensive database for tracking property and casualty claims
DISCLAIMER This presentation is intended for information and discussion purposes only and does not constitute legal or professional investment advice. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Harbor View Advisors, LLC (“HVA”). The information in this presentation was compiled from sources believed to be reliable for informational purposes only. HVA does not endorse or approve, and assumes no responsibility for the content, accuracy or completeness of the information presented.
