Ghost brokers scam on the rise says LV
Wed, 10 May 2023
Drivers are being warned of an increase in ghost brokers posing as online insurance brokers through social media and selling fake policies.
LV=General Insurance has seen a 31% rise in policy fraud, including insurance policies taken out by ghost brokers that are often invalid, leading victims to drive on the road uninsured.
Referrals of ghost brokers from LV= into the Insurance Fraud Enforcement Department (IFED) at the City of London Police increased by 143% year-on-year between 2021/22. LV= is referring higher numbers than ever to the police to bring those behind organised crime to justice.
Ghost brokers often target young and vulnerable consumers who do not fully understand buying insurance and are attracted by low premiums.
According to the Insurance Fraud Bureau (IFB), over 55,000 fraudulent motor insurance applications have been discovered in the last 12 months, more than double the figure previously detected, with ghost brokers linked to thousands of cases.
LV= has strengthened its fraud defences, catching the evolving tactics of criminals. It is important to check if an insurer or broker is regulated by the Financial Conduct Authority (FCA) when buying insurance to avoid wasting money on a worthless policy.
LV= proactively detected and disrupted a ghost broking case, referring it to the police. The victim, Fiona, was contacted by the insurer after being found to be a victim of ID theft.
Fiona got into a WhatsApp conversation with a ghost broker, who stated he could get cheaper cover by changing the address and occupation on the policy, but Fiona decided not to do this and provided her genuine details.
She then received insurance documents, which turned out to be fake. The ghost broker then used Fiona's details to obtain further insurance for other people with her address and information.
Ben Fletcher, Director of Financial Crime at LV= General Insurance, said: "We need tougher regulations across social media platforms to protect vulnerable people and prevent the continued rise of ghost broking."
Jon Radford, Head of Intelligence, Investigations and Data Services at 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."
