Ghost broking: insurer's fraud warning after 143% jump in referrals for fake policy scam

Drivers have been warned by a leading insurer not to fall for too-good-to-be-true insurance deals after it reported a sharp rise in cases.

LV= General Insurance said it had seen a 31% increase in policy fraud in the first three months of 2023 and had recorded a 143% rise in ghost broker cases it referred to police in the last year.  Its director of financial crime said the new figures showed efforts to catch criminal gangs were working but that drivers also needed to be aware of scams which can leave them out of pocket and uninsured. 

According to the Insurance Fraud Bureau (IFB), in the last 12 months over 55,000 fraudulent motor insurance applications have been discovered, with ghost brokers linked to thousands of cases. 

Ghost brokers use social media or word of mouth in local communities to target young and vulnerable drivers who often struggle with expensive insurance premiums. The con artists offer to arrange policies at far lower costs but then supply fake documents, often obtained using someone else’s details, or provide real documents but then immediately cancel the policy and keep the refunded premium. In either case, the victim is left poorer and driving without insurance, which can carry massive fines and other penalties. 

Ben Fletcher, director of financial crime at LV= General Insurance commented: “We’re working hard to detect and disrupt the issue of ghost broking. However, we need tougher regulations across social media platforms to protect vulnerable people and prevent the continued rise of ghost broking.

 “There are so many different types of insurance fraud, so it’s crucial we help educate consumers about emerging trends and provide top tips to help them spot the signs.”

 Among the signs of a ghost broking fraud are prices that are far below anything else you have been quoted; “brokers” who only operate via services such as WhatsApp; services that use multiple bank accounts; and anyone asking for cash payments. 

Jon Radford, head of intelligence, investigations and data services at the IFB, said: "The significant financial pressure that so many people are facing is sadly providing fertile ground for ghost brokers. These shameless fraudsters prey on the most financially desperate people, luring them in with too-good-to-be true car insurance deals on social media which are entirely fake. Not only are victims left hundreds of pounds out of pocket, but they can be stopped by the police and have their car taken away for no insurance.

 "Ghost broking is a serious problem and we're determined to tackle it. We're actively investigating suspected ghost broking fraud networks in collaboration with police and insurers to protect more people from falling victim.”

LV='s tips to tackle insurance fraud:

• If it looks too good to be true it probably is - don’t get lured by low premiums through a ghost broker because if you have an accident you won’t be covered.
• Be careful how pay for your insurance – genuine insurers or brokers are unlikely to be asking for large admin fees to be paid in to separate bank accounts.
• Validate the account you are being asked to pay money in to.
• Don’t meet people offering to deliver your insurance certificate in car parks for cash payments.
• Check the FCA register to ensure your insurer or broker is genuine.