Ghost broking losses cost £631,000 over the last three years - IFED

Losses from ghost broking totalled £631,000 in the last three years, with over 850 incidents reported to Action Fraud. City of London Police’s Insurance Fraud Enforcement Department (IFED) has launched a new campaign to try and combat the fraud.

Almost half (417) of all reported incidents led to action being taken against offenders.

Successful cases include when a jailed ghost broker was ordered to repay £658,000 to his victims, a ghost broking ring of four men being caught out in Birmingham, and a teenage ghost broker was jailed for a year over selling fake Allianz policies.

However, the true number of motorists affected is expected to be higher, as some victims may be unaware that they are driving with a fraudulent policy and will only realise once they are pulled over by the police or involved in an accident.

Neil Clutterbuck, chief underwriting officer, Allianz, urged for industry collaboration in light of the figures, commenting: “These latest figures from IFED demonstrate the severity of ghost broking and the level of sophistication employed by the fraudsters, who target and exploit vulnerable individuals or those who might struggle to obtain cheap cover.”

Clutterbuck added: “While the industry has made great progress in clamping down on many unscrupulous practices, fraudsters are adept at finding new ways to play the system. Strong fraud teams and investment in software and technology are key to identifying potential fraud at application stage. It’s also important that insurers collaborate with the broking community and authorities, to make sure that we identify potential issues and aren’t seen as an easy target by criminals. Staying vigilant and taking a proactive approach is essential if we are to stamp ghost broking out for the benefit of the honest customer.” 

The average cost of ghost broking per victim was £769, according to IFED, and ghost brokers are most likely to target men in their 20s, often on social media.

Victims of ghost broking could end up with points on their licence, a fixed penalty notice, or they may be liable for the full cost of claims if they are in an accident.

In addition, their vehicle could be seized or destroyed, and they could have to pay costs to retrieve an impounded vehicle.

They will also have to cover the cost of a real insurance policy.

Raising awareness

IFED’s campaign to raise awareness of ghost brokers will urge motorists to ‘Steer Clear of Fraud’.

“If it looks too good to be true”, the campaign video (watch below) warns, “then it probably is!”

IFED head, Detective Chief Inspector Andy Fyfe, cautioned motorists: “As well as the personal harm experienced by victims, ghost brokers also cause financial harm to the insurance industry, driving up the cost of insurance premiums for all motorists.”

Fyfe continued, “While an offer of cheap car insurance may seem tempting, falling victim to ghost broking will end up costing you far more in the long run – both in terms of money and your licence.”

IFB comes out in support

The Insurance Fraud Bureau (IFB), which has 50 ongoing investigations into ghost broking, has also come out in support of the IFED campaign.

Ben Fletcher, director of the IFB said: “Ghost broking is a complex issue and one that we do not take lightly. Ghost brokers often target vulnerable people or communities, but we do also sometimes see cases where people have knowingly bought fraudulent or invalid policies in an effort to pinch the pennies.”

Fletcher continued: “It is essential that we raise awareness about the issue of ghost broking to stop innocent victims being targeted and to educate those who may consider buying insurance from a disreputable source. We work closely with police and insurers to track all those involved in ghost broking scams in order to bring about charges for those guilty parties.”

You can follow or support the campaign on social media using #SteerClearOfFraud