New Analysis Estimates Lower Trust and Inaccurate Information Cost U.S. Personal Lines Insurance $45 Billion Annually

Expert argues trust is the first transformational variable in personal lines insurance since credit scoring and telematics

CHEVY CHASE, Md., Aug. 13, 2026 /PRNewswire/ -- Fraud and inaccurate information cost the U.S. personal auto and homeowners insurance market an estimated $45.3 billion annually, according to a new industry analysis released today by Clearspeed, a leading risk assessment provider to global insurers. Over the past 30 years, inaccurate information, opportunistic misrepresentation, and fraud have permeated the insurance ecosystem. The industry has responded with increased data verification processes that have normalized customer friction and, in many cases, eroded trust.

Authored by veteran insurance executive and Clearspeed advisor Mr. Kim Garland, former President of State Auto Insurance and former Chief Product Officer of AIG's Global P&C Consumer Division, the new analysis argues that trustworthiness may represent the first new transformational variable in personal lines since credit scoring. Garland examines how trust intelligence provides a new layer of insight for differentiating risk at the individual level and optimizing the process throughout.

The analysis examines three core functions across personal auto and homeowners insurance—claims, new business underwriting, and renewal underwriting. Together, the analysis estimates that fraud and inaccurate information account for approximately $31.6 billion annually in personal auto insurance and $13.7 billion annually in homeowners insurance. It concludes that the industry's challenge is no longer simply detecting inaccuracies in the system and closing key information gaps—it is managing the operational cost of degraded trust.

All bear the cost in a non-trustworthy system

Garland, a Fellow of the Casualty Actuarial Society with more than three decades of executive leadership across virtually every discipline in corporate insurance, uses his executive lens to explain that the current industry response has been excused and largely unchanged for decades. The response includes:

• accepting that a level of fraud and opportunistic misrepresentation is inevitable
• adding processes to catch bad actors that hurt the customer experience for all
• increasing rates across the policyholder base to absorb the cost of missed fraud

The result is higher losses and expenses for insurers and higher premiums and longer wait times for the majority of genuine customers.

As personal lines insurers face mounting pressure to improve affordability, availability, and customer experience, Garland argues that insurers should complement historical data with an in-the-moment indicator of trustworthiness as a new operational variable. When introduced early in the policyholder lifecycle, the variable can help reduce costly verification in underwriting and claims, allowing most customers to move forward quickly while reserving additional review for higher-risk cases.

The homeowners market is the first P&C line that will reach its breaking point

The homeowners' examination demonstrates the implications of a lower-trust operating model. Garland concludes that homeowners insurance has become the first personal-lines market in which the cost of lowered trust is colliding with affordability and availability pressures. He warns against continuing existing practices in which bad actors have begun to overwhelm the system, leaving the genuine policyholder majority subject to consistently increasing rates and a degraded policy experience.

"It is no longer arguable. The U.S. insurance system has evolved into a low-trust system that cannot run indefinitely, as the costs of a few overwhelm the many. Rate increases in perpetuity are not the answer," states Garland. "What if you knew what to trust? What would that change for insurers? If an insurer had help in practically separating trustworthy actors from non-trustworthy actors at each decision point, it could reverse a decades-long trend. As large carriers experience success in incorporating trustworthiness into their operations, the question becomes how long others can afford to wait."

Across the insurance industry, Clearspeed's technology is generating measurable value for clients who are leveraging previously unavailable indicators of trustworthiness. On average, Clearspeed insurance clients are differentiating themselves from their peers with a 40% increase in immediate settlements, a 50% reduction in claims-handling time, a 36% increase in preventive fraud savings, and consistently high customer experience scores.

The complete analyses and data are available at:

• The next multi-billion dollar variable in the insurance industry 
• Homeowners: The P&C insurance market most likely to fail over the next five to ten years; includes workbook planning tool

About Clearspeed

Founded in 2016, Clearspeed is the global leader in voice-based risk assessment. Its proprietary technology detects the level of risk in a person's voice based on vocal characteristics universal to all humans—enabling faster, more confident decisions. Initially developed for the U.S. Department of Defense, Clearspeed quickly exposes indicators of risk for government and military agencies in high-stakes environments. Commercially, it helps insurers, financial institutions, and other enterprises assess risks like fraud and insider threats, unlock operational savings, and elevate the customer experience. With broad applications, Clearspeed delivers bias-free, highly precise, individual risk assessment wherever achieving trust at scale is essential.

With offices in the Washington, D.C. area, San Diego, and internationally, Clearspeed is used in 37 countries and supports over 60 languages. The company has earned more than 30 industry awards, including CNBC's World's Top InsurTech Companies. Learn more at www.clearspeed.com.

SOURCE Clearspeed