Drivers urged to watch out for fake insurance deals or risk crushing consequences

Drivers are being urged to watch out for bogus motor insurance deals rife on social media, following warnings far more people could fall for the scam amid the cost-of-living crisis.

Fake motor insurance deals which are also known as Ghost Broking scams, involve fraudsters pretending to be Brokers in a bid to offer unsuspecting customers temptingly cheap yet entirely fake insurance policies.

Exclusive YouGov research reveals only one in six people (17%) are currently aware of Ghost Broking scams, despite its prevalence on popular sites like Facebook and Instagram.

The Insurance Fraud Bureau (IFB) which investigates organised insurance fraud with insurers and UK police, discovered over 55,000 fraudulent motor insurance applications in the past 12 months - more than double the figure previously detected, with Ghost Brokers linked to thousands of cases.

As the cost of living soars, there are concerns that the number of Ghost Broking victims will rise fast unless more is done to alert people to signs of the scam.

As a result, today IFB in partnership with the General Insurance Fraud Committee (GIFC) and City of London Police’s Insurance Fraud Enforcement Department (IFED), is launching an awareness campaign to educate young drivers most likely to fall victim to the scam, on how to spot the signs and how serious the consequences can be.

The rise in detected application fraud is the result of insurers increasing efforts with IFB to protect consumers from the devastating impact of fraud.  

Not only are victims of Ghost Broking scams left out of pocket, but they are driving without valid insurance which means they’re not covered in the event they cause a collision and could be liable to cover the cost.

Victims can face criminal charges for driving without valid insurance which comes with a £300 fine, six licence points, and the vehicle in question can be seized. One in three seized uninsured vehicles are consequently crushed.

Ghost Brokers also pose a serious cyber threat as they steal personal information in order to take out policies under the names of individuals – such as experienced older drivers who usually have cheaper insurance - in order to forge and sell on policies in other people’s names.

It is hoped that this awareness campaign in addition to improved regulations for online advertisements outlined in the Online Safety Bill, will cause significant disruption to fraudsters’ efforts to promote bogus motor insurance deals online.

Over £1 billion in application fraud is detected each year, based on annual figures released by Association of British Insurers (ABI).

Ursula Jallow, Director at the Insurance Fraud Bureau (IFB), said:

“Ghost Broking scams are rife on social media and the impact is far reaching. Not only do Ghost Brokers leave victims penniless, without a vehicle and at risk of criminal charges, but these fraudsters are a cyber threat and cost the economy millions.

“In these hard economic times it’s crucial for drivers to spot the signs of Ghost Broking scams, which is why we’re proud to be launching this campaign in partnership with GIFC and IFED. We urge anyone with evidence of an insurance scam to report it to us straight away.”

David Phillips, Chair at the General Insurance Fraud Committee (GIFC) and Claims Validations Technical Manager at NFU Mutual, said:

“We know that fraud increases in times of hardship and that impenitent criminals will be looking to prey upon innocent cash-strapped motorists.

“Insurance fraud is a socially corrosive crime and those that create illegal and bogus policies leave young people, often some of the most vulnerable of society, without cover and without a safety net against the far-reaching consequences of driving without a legal policy in place.

“The General Insurance Fraud Committee (GIFC) brings together the UK’s largest group of insurers to fight insurance fraud and protect our customers from fraud, so we are proud to be working with IFED, IFB and ABI to raise awareness of the pernicious and damaging effects of ghost broking fraud.”

Detective Chief Inspector Tom Hill, at City of London Police’s Insurance Fraud Enforcement Department (IFED), said:

“Whilst we continue to disrupt Ghost Brokers by cutting off their online resources, we urge the public to look out for the signs that point to a fraudulent policy. A cheap offer may be more enticing now than ever as we head into a tough economic climate, but a bogus policy will end up costing you far more in the long run.

“Not only do social media platforms give fraudsters a front to hide behind, but they also provide a huge audience of potential victims to target. Over the past year, every report of Ghost Broking to Action Fraud has been cyber-enabled, proving that it really is important to be wary of too-good-to-be-true deals online. These reports have amounted to £1.5 million worth of losses.“We hope that this campaign will remind people to complete the relevant checks before parting with their hard-earned money.”

How to spot the signs of a Ghost Broking scam

Many Ghost Brokers offer up-front fixed prices without any form of assessment, even though motor insurance is priced based on the risk of the information provided by the policyholder. In some instances, Ghost Brokers will carry out a mock assessment, but the price still will usually be unrealistically cheap.   

Ghost Brokers may behave in an unprofessional way and encourage victims to speak on end-to-end encrypted messaging apps like WhatsApp, to keep illegal dealings in private.

They may also boast that the insurance policy is legitimate because it appears on the Motor Insurance Database (MID), whilst in reality this is only because they have taken out a policy using false information which makes it entirely invalid. 

What checks can be done online?

• Insurance Brokers are registered with the British Insurance Brokers’ Association (BIBA).
• Insurance Advisors are registered with the Financial Conduct Authority (FCA).
• Motor insurers are members of the Motor Insurers’ Bureau (MIB).

Report insurance fraud

Anyone who thinks they have evidence of an insurance scam can report this confidentially to the insurance industry via IFB’s CheatLine online or via its phoneline (powered by CrimeStoppers) at 0800 422 0421.

Ghost Broking can also be reported to the police via Action Fraud.