Ghost Broker Warning As Motor Insurance Fraud Cases On The Rise

Between January and December 2020, Action Fraud received 694 reports of ‘ghost broking’, a near 10 per cent increase on 2019. With the City of London Police issuing stark warnings about the dangers of ghost broking, and the associated risks for the policyholder very serious indeed, it is important to be on your guard and fully aware of just what this phenomenon is all about.

Ghost broking is a form of insurance fraud that sees victims unwittingly buying fake motor insurance policies.

The national fraud and cyber-crime centre, Action Fraud, received 694 reports in 2020 of ghost broking. Of those reports, around a third came from victims aged 17-29.

With each individual losing £559 on average, and with related risks such as the implications of driving without insurance incredibly serious, ghost broking really is something that you need to be aware of.

What is ghost broking?

Ghost brokers are fraudsters who target innocent drivers looking to take out a motor insurance policy. They usually focus on the higher risk driver who finds it more of a challenge to secure affordable cover.

Ghost brokers use a range of tactics to sell their fake policies. They will often target drivers via social media, offering cheap insurance premiums. Posing as middlemen for well-known insurance providers, they claim to offer legitimate car insurance at cut price rates.

This type of fraud may involve completely forged insurance documents, or they may come from a legitimate insurer, but use false details to lower the premium. Details that are falsified could include the likes of the insured’s occupation, homeowner status, age and how long they’ve been driving. In other words, anything that will lower the cost of the policy.

Sometimes the fraudster will use a different tactic, actually taking out a genuine policy, then cancelling it shortly after they’ve received your payment. However they do it, their victims do not realise that they are lacking genuine cover until they are stopped by police for driving without insurance, or they attempt to make a claim.

Why do ghost brokers target younger people?

Ghost brokers tend to target younger drivers because they will typically be looking to save as much money as possible. With cheap offers hard to resist, they make the perfect victims.

Also, with a limited understanding of insurance, particularly understandable if they are new drivers, young people will lack the knowledge required to spot a non-legitimate offer.

How to protect against ghost broking?

Ghost brokers often advertise on student websites, social media platforms and money-saving platforms. They may also advertise in the physical world as well as the virtual arena, pinning adverts to university notice boards or in newsagent windows, or leaving leaflets in pubs or garages.

A survey by YouGov commissioned by the Insurance Fraud Bureau revealed that one in three 18-24 year olds have seen a suspicious insurance advert on social media.

Do your due diligence. You won’t usually find a ghost broker with a landline telephone number. They tend to use mobile numbers only, and often communicate using WhatsApp or Facebook Messenger.

Always keep in mind that if a deal appears to be too good to be true, then it probably is. If an insurance quote is considerably cheaper than several others you have received, there is every chance it is being offered by a fraudster.

If you have any doubts about whoever is offering you insurance, you can check them out on the Financial Conduct Authority website, or the British Insurance Brokers’ Association website where you will find a list of all officially authorised insurance brokers. You can also contact the insurance provider themselves to verify the broker’s details, and the legitimacy of the quote and any cover you have already taken out.

Detective Chief Inspector Edelle Michaels of the City of London Police’s Insurance Fraud Department said:

“Whilst the coronavirus pandemic has halted some forms of criminal activity, reports to Action Fraud show that this is certainly not the case for ‘ghost broking’. 2020 saw nearly a 10% increase on the previous year for the total number of reports for this type of fraud, indicating that these fraudsters are still able to operate in the current circumstances.”

“There have been examples of ‘ghost brokers’ exploiting the pandemic – we have even seen a case of someone offering discounts to NHS workers on fraudulent insurance policies. Clearly fraudsters have no qualms in manipulating vulnerabilities, and with students being in a difficult situation shrouded with uncertainty at the moment, it is vital that they remain wary of this type of fraud.”

What are the repercussions of ghost broking?

The repercussions of ghost broking are very serious.

Despite the fact that the victim has been subject to fraud, they may be exposed to fixed penalty fines, penalty points on their licence, their vehicle being impounded by the police, a criminal record and, if the vehicle has been involved an accident without insurance, liability for repair costs and compensation if anyone has been injured.

What’s more, it may even lead to difficulty in obtaining insurance in the future.

What to do if you believe you’ve fallen victim to a ghost broker?

You can check to see if your vehicle is insured on the Motor Insurance Database website. If you have taken out cover, but your vehicle is not showing as insured, you may have been targeted by a ghost broker.

If you think you have been a victim, you should report your concerns to Action Fraud at actionfraud.police.uk or on 0300 123 2040. You can also contact the Insurance Fraud Bureau (IFB) via its confidential Cheatline on 0800 422 0421, or on the IFB website.

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