How ghost brokers operate, the consequences for victims and how to stay safe.
Cost of fraud tops £11.5 million
Ghost insurance brokers have tricked countless motorists into purchasing fake policies that provide no protection, The City of London Police Insurance Fraud Enforcement Department confirmed (IFED). The Department has conducted 86 separate investigations into fraud of this nature since its establishment in 2012. The total value of such criminal efforts is in excess of £11.5 million.
How ghost brokers operate
Ghost broker strategy varies but he likely promises to save the motorist money. Imagine, for example, that the victim is a 22-year-old from a rough city that travels 30,000 miles per-annum. A legitimate policy is likely to be expensive - £1,000, perhaps - as the victim is young, the mileage high and crime nearby is prolific.
The ghost broker charges a temptingly low sum – £750, perhaps – then contacts an insurer and provides false information. He might state that the victim is older, lives in a low crime area and covers 2,000 miles per-annum, for example. Such factors lower the cost of the policy to (say) £500 and the criminal pockets the rest.
The victim might then receive false documentation. Electronic databases that theoretically confirm whether the car is insured might be fooled, too. They might recognise that its registration number is associated with a policy, for example, but not that the policy is invalid as the fraudster provided inaccurate information.
Consequences of trusting a ghost broker
The Head of The Insurance Fraud Enforcement Department, Detective Chief Inspector Oliver Little, explained: “Many people will be looking to find the best possible deal for their car insurance, but if you’re getting somebody to broker a deal for you then you must make sure they’re a fully authorised insurance broker.”
He added: “Not only are fraudsters leaving their victims out of pocket when they take their money, they’re also leaving their victims potentially liable for tens of thousands of pounds if they are involved in a crash whilst uninsured.”
“We’ve seen many victims who have had their car seized - and given fines and points on their licence - because they were stopped driving without valid insurance and had absolutely no idea”, he concluded.
How to avoid ghost brokers
- The City of London Police confirmed how to avoid becoming a victim. Tips include:
- if a deal seems too good to be true then it probably is;
- the Financial Conduct Authority website has a list of authorised insurance brokers;
- to confirm a policy is valid, contact the insurance company directly rather than referring to a suspect broker.