Is your company prepared to deal with ghost brokers?

18th September 2018

Ghost broking is by no means a new concept, but the practice has recently reared its ugly head again with various media outlets reporting of incidences and people being scammed. It’s often the more vulnerable that are affected by ghost brokers as these con artists that sell fake insurance policies tend to target students, teenagers, the elderly and people with previous driving convictions desperate for cheap cover.

Just this week The Manchester Evening News reported that freshers were being targeted by a ghost broker who had scammed youngsters out of tens of thousands of pounds. The majority of victims are aged between 17-24 years of age, say Action Fraud, and fraudsters use social media sites like Instagram, Facebook and Snapchat to get hold of their victims as well as messaging apps like WhatsApp. Other contact methods include adverts in newspapers, magazines, cold calls and even being introduced by family members, friends and work colleagues. While victims are stranded without relevant cover, the industry is also affected and losses are reported to stand at £164,993 since November 2014.

According to the City of London Police, Ghost brokers sell ‘fake’ insurance policies to unsuspecting customers in two common ways. They either sell fake car insurance by forging insurance documents or they falsify details with legitimate players in the market to bring the price down. A third tactic that’s been reported on includes the fraudster taking out a genuine policy before cancelling it and then being so bold as to approach the insurer or broker for the refund and then making off with that and the victim’s money which is often asked for in cash.

If you haven’t done so already, it’s important to warn customers of this danger particularly if they are going through difficulties financially and looking to save money. The City of London Police have warned that the onus is on consumers to make sure they are dealing with legitimate companies or risk having points on their license, a fixed penalty notice, their vehicles seized and even destroyed. What’s more, if they are involved in an accident while covered by these fake polices they will be held liable for claims costs.

But equally, we feel that businesses should also do all they can to up their security so that they are not at risk of enabling fraudsters to easily get ‘legitimate’ policies with fake credentials. Fraud teams within departments should also be trained properly to ensure they can spot such fake applications.

Back in 2013 the AA welcomed an industry initiative to raise public awareness of the phenomenon so that young drivers would not be ripped off by these con artists. They’ve warned that ghost brokers tend to be IT literate and understand the insurance industry well. It’s all the more reason that the insurance industry keeps on its toes and ups its security measures to oust these technologically savvy fraudsters out of this practice. It’s difficult to detect them however and usually by the time it has been revealed that policy is fake the crook is long gone.  

If you’re worried about the security of your business, call us today for a free no-obligation security scan for your entire business. We’ll assess your platform strengths and your internal policies and make recommendations, so you can strengthen your processes, fend of criminals and be compliant for regulatory purposes too. For more information, click here.

Leave a Reply

Your email address will not be published. Required fields are marked *

two × four =