As the IFB warns new and younger drivers about bogus car insurance policies, Insurance Times finds out what this means for the industry

Financial hardship and a large influx of new drivers set to pass their tests following the lifting of Covid-19 lockdown restrictions will provide “fertile ground” for ghost broker scammers, according to the Insurance Fraud Bureau (IFB).

Ghost broking is a growing scam which typically involves fraudsters pretending to be insurance brokers, with the aim of selling bogus and unrealistically cheap policies - often to younger drivers via Facebook and Instagram.

In most circumstances, the scammer will then encourage the victim to contact them further through popular end-to-end encrypted messaging software, such as WhatsApp.

In some cases, scammers also use stolen personal information to take out policies - these are are subsequently doctored before being sold on to customers.

According to the IFB, its investigations with the police into this type of organised crime have doubled since 2016.

These investigations revealed that younger drivers, in particular, have lost hundreds of pounds due to ghost broking.

Stephen Dalton, head of intelligence and investigations at the IFB, said: “Anyone who is financially vulnerable can be susceptible to ghost broking scams. However, young drivers are at particular risk as they may have less experience of insurance services and will be seeking affordable car insurance.

“With a large influx of learner drivers catching up from the disruption of Covid-19, this new wave of mostly young motorists could provide fertile ground for car insurance scammers.

“We’re working closely with insurers and the police to detect and disrupt organised ghost broker scams and we’re pushing for greater public awareness of the issue.”

‘Too good to be true’

A spokesperson from law firm Carpenters Group highlighted that consumers looking for the best insurance deals following the economic uncertainty of the pandemic is “entirely natural”, especially as “many furloughed people [are] now starting to prepare themselves for return to work” and get their cars back on the road.

However, while “it’s always possible to find a good deal” – this will come from genuine brokers, direct to market insurers and the aggregators.

Confirming the importance of contacting a legitimate broker, spokesperson for the ABI Malcolm Tarling said: “If a deal sounds too good to be true, there is a good chance that it probably is.

“Whether you are an innocent victim or knowingly buy fake motor insurance, the result is the same - you are driving illegally and risk getting a criminal record and face much higher insurance costs in the future.

“The only policy is to play it safe and stay legal by checking your cover is genuine before you buy it.”

Consumer consequences

While the IFB noted that social media and WhatsApp are prominent platforms for ghost brokers to advertise scams, the ABI also warned consumers to be aware of insurance policies being sold via newsagents, motor repair shops, pubs, clubs and bars.

If an individual does buy a fraudulent policy through an illegal insurance advisor, in addition to driving illegally, the victim may:

  • Incur a fine and gain six penalty points on their driving license.
  • Be unable to make a future claim.
  • Have their vehicle seized, resulting in having to pay a fee to get it released from the pound or to avoid it being crushed.
  • Be forced to pay costs that could amount to millions of pounds if, for example, they were at fault for a crash in which a third party was injured.
  • Have to pay for another genuine policy.

Matt Crabtree, complex and organised crime manager at LV= General Insurance, added: “Ghost broking continues to be a substantial problem for the industry and with the continued rise in social media use and fake advertising, unfortunately younger drivers tend to be the victim.

“We’re always looking at different ways to raise awareness of the risks of using a ghost broker, which can have huge consequences.”