The acceleration in technological advancement, especially in artificial intelligence and image and sound processing, has led to increasing digital challenges, most notably the phenomenon of deepfakes, according to the Insurers Federation of Egypt (IFE).
Deepfakes have become one of the most dangerous unconventional risks confronting both organisations and individuals, and escalating cyber, reputational, legal and other risks. The impact of deepfakes extends beyond direct financial losses to include intangible and often hard-to-quantify damages, making them significantly more difficult to assess, manage, and insure than traditional risk exposures.
In its weekly bulletin last week, the IFE said that deepfakes are no longer limited to recreational or experimental uses, but have become an advanced tool that can be employed in financial fraud, defamation, and impersonation. It gives rise to new and complex digital risks. To counter them, a different and more sophisticated approach is needed.
The IFE said that the insurance sector is among the most affected by the repercussions of deepfakes, given the potential for increased fraud in insurance claims, the complexity of verification and pricing processes, and the escalating legal responsibilities related to data protection and corporate reputation. Deepfakes also dent data credibility and customer trust.
The IFE said that this situation presents a dual challenge: understanding the nature of these risks on the one hand, and developing effective mechanisms to manage and mitigate their impact on the other.
The Federation, through the bulletin, aims to highlight the various dimensions of deepfake risks and focuses on the role of insurance as a pivotal tool in managing this type of risk.
The IFE explained that fraudsters are now able to create fake videos or audio recordings to impersonate policyholders, making identity verification more difficult. These techniques can also be used to falsify medical test results or manipulate images of individuals and property, presenting them in a misleading way that downplays risks or misrepresents safety standards, particularly in property and casualty insurance. This, the Federation noted, makes verifying claims more challenging and increases the likelihood of fraudulent payouts.
The increasing prevalence of manipulated content is forcing insurance companies to invest more in the tools and processes necessary to verify claims and documents, resulting in higher operating costs and potential delays in claims settlement. Insurance companies will be compelled to reprice risks and raise premiums to cover the increased exposure.
To combat deepfakes, measures to be taken include developing appropriate insurance coverage, strengthening early detection mechanisms, and supporting the integration of modern technical solutions and regulatory procedures.