Mandatory fines in the seven figure range would maybe be a sufficient deterrent, on account of most people probably not even filing claims, and less people disputing a denial.

The penalties need to be extremely harsh to make up for this imbalance.

Another solution would maybe be to not require people to claim by law, and make it mandatory for airlines to pay this out themselves. Combine with airlines having to self-report every flight and its on-time status to a governing body, which can then audit their honesty in this regard.

The current system, while better than nothing, is in all honesty inadequate.