Detective inspector Simon Klust, deputy head of the City of London Police’s Insurance Fraud Enforcement Department, explains how the police unit has changed tack to reduce reoffending

Ghost broking, the act of unauthorised intermediaries purporting to be legitimate insurance brokers, continues to be a prevalent threat affecting all those involved in the counter insurance fraud effort. It remains the largest offence type investigated by the City of London Police’s Insurance Fraud Enforcement Department (Ifed).

We all know that ghost broking is far from being an innocent deception, where the odd detail here and there is changed. Instead, it can leave people without valid insurance and drives up the cost of premiums for all innocent customers.

Customers who believe they are getting a great deal are often spending hundreds of pounds in admin fees for insurance not worth the paper it is written on.

The good news, however, is that the insurance industry continues to enhance its detection capabilities, which results in high numbers of ghost broking referrals being received by Ifed for investigation.

Ghost broking currently represents around 30% of Ifed’s entire investigative portfolio, with over 70% of offenders identified as being volume players with little sophistication to their operations.

In fact, the vast majority of ghost broking offenders are not previously known to law enforcement, which has led Ifed to review its tactics in this area.

Employing new tactics

Historically, policing has operated under a model where a report of crime is made and a reactive investigation is launched.

While there will always be a place for such work, reactive fraud investigations can often take several years to complete due to the volume of material identified and the intrinsic enquiries this material generates.

We have also found that the previous good character of these offenders often meant that sentences were short, or based in the community.

A holistic review led us to revamp our efforts to tackle ghost broking, with a focus on disrupting, deterring and educating offenders rather than solely relying on traditional investigative methods and punitive outcomes.

Launched in December 2020, Operation Mirage has seen us identify and deal with online fraud and increasing numbers of ghost brokers at earlier stages of their offending.

While this effort makes it harder for insurance fraud criminals to operate online – for example, by removing their access to social media platforms and making it more difficult for them to use phone networks – we also place a large emphasis on educating offenders through our linked Operation Anax, which launched in 2021.

Within Operation Anax, we aim to educate and deter future criminality through the use of cease and desist notices. Key to the success of these notices are in-person visits to discuss the impact of offending, while also – in the case of unauthorised online brokers – highlighting how they can operate legally.

Offenders dealt with through Operations Anax or Mirage are monitored to ensure they do not reoffend.

Combined, these efforts have seen the reoffending rate for people given cease and desist notices by Ifed fall to 4%. This is well below the latest nationwide figures, published in January 2024, which show reoffending rates to be 25.1% for all adult offenders, increasing to 55.5% for those handed a custodial sentence of less than one year.

Seeing results

By disrupting ghost brokers at an early stage, we have increased Ifed’s capacity to tackle more reports of insurance fraud.

As an example, in the three-year period leading up to 2023, the number of ghost brokers dealt with by Ifed increased by 85%. This means that more offenders are visited, disrupted and educated to prevent the insurance industry and the public becoming victims.

We are now trialling expanding our Operation Mirage capabilities to have an even greater impact.

While we have seen success in tackling offenders at an earlier stage, we will continue to investigate ghost brokers where offending is particularly harmful – and put them before the courts.

In January 2024, 30-year-old Hafiz Mohammad from Manchester pleaded guilty to multiple counts of fraud relating to his ghost brokering activities, in which he targeted the Sudanese community.

The painstaking and in-depth investigation by Ifed saw community trust being gained by law enforcement and Mohammad being made to recompense his victims for his crimes.

This demonstrated a great investigative effort by the Ifed detective.