Ghost Broking – The tricks of the trade

Wednesday, December 4th, 2013

It is still in the news and as big a threat as ever. The term ‘ghost broker’ was unheard of to most of us a year ago but as insurers are uncovering instances on now daily occurrences the issue is still very much a problem.

This is not just a problem for the motor insurance industry but very much a problem for the customer being sold a fake policy. These ghost brokers pray on the vulnerable and the fact that most customers cannot pay the high premiums being quoted in the first place. The unfortunate fact that these policies are usually cancelled shortly after being taken out or incepted with false information means they are invalid so the customer has lost their money and will need to pay out again but this time for a genuine insurance policy.

There are patterns emerging on how these criminals work and insurers have given information out on how these scams are being run.

There are three main types of ghost broking. The first is where a fraudster creates a false policy by compiling a document for a customer based on a copy of a genuine insurance policy. However the customer can check whether their vehicle is actually insured through the motor insurance database so it is usually easily to identify quickly that a policy has never really been incepted.

The second is where a ghost broker takes out a genuine policy on behalf of a customer and arranges for the certificate of insurance to be sent to them. The idea is that the broker will then pass the documents to the customer. The fraudster uses the correct name and vehicle details so the customer can check on the MID website that their vehicle is covered. So most people believe they have insurance for the year. But shortly after the policy is taken out, the broker cancels it, does not tell the customer, and pockets the refund. The unsuspecting customer has a genuine certificate but does not actually have any cover in place.

The third type of scam is where the ghost broker takes out a genuine policy for the customer but falsifies some of the policy information. For example, the broker may change the date of birth of the customer to obtain a lower premium. In these cases there is an insurance policy in place but it is not valid as it has been purchased fraudulently.

The simple steps to protect you from getting caught out are to use a broker, who has been recommended, has commercial premises, and are regulated by the FCA. We all want to pay the least possible for our insurance but we also have to be realistic when receiving quotations, if a quotation is far cheaper than others received. Do your homework on the broker and make sure you are buying from a genuine source.