The FINANCIAL — ‘Ghost’ car insurance brokers have become a spectre that is thought to cost the insurance industry tens of millions of pounds every year, leaving thousands of drivers without cover. AA car insurance says that its own fraud team blocks up to a dozen attempts to obtain car insurance by suspected ‘ghost brokers’ – criminals who sell ‘cheap’ fraudulent car insurance policies – every day.
AA Insurance has welcomed a new industry initiative to raise public awareness of the phenomenon, including an animated video warning motorists, especially young drivers, about being ripped off by fraudsters selling fake car insurance, according to Automobile Association Developments Limited.
At a time when car insurance has become fiercely competitive, this is a very nasty type of insurance scam that fleeces vulnerable individuals and leaves them with useless car insurance.
Ghost brokers tend to be IT literate and understand the insurance industry well. Their scams are sophisticated and can be difficult to identify but insurers, including the AA, are making significant strides to stop them.
No one knows how many policies that appear legitimate are ghosted. When they do come to light, the ‘broker’ will have disappeared into thin air while their customers are left with insurance cover that is no more than an apparition.
‘Ghost’ car insurance brokers have become a spectre that is thought to cost the insurance industry tens of millions of pounds every year, leaving thousands of drivers without cover, according to Automobile Association Developments Limited.
AA car insurance says that its own fraud team blocks up to a dozen attempts to obtain car insurance by suspected ‘ghost brokers’ – criminals who sell ‘cheap’ fraudulent car insurance policies – every day.
AA Insurance has welcomed a new industry initiative to raise public awareness of the phenomenon, including an animated video warning motorists, especially young drivers, about being ripped off by fraudsters selling fake car insurance.
At a time when car insurance has become fiercely competitive, this is a very nasty type of insurance scam that fleeces vulnerable individuals and leaves them with useless car insurance, according to Automobile Association Developments Limited.
Ghost brokers tend to be IT literate and understand the insurance industry well. Their scams are sophisticated and can be difficult to identify but insurers, including the AA, are making significant strides to stop them.
No one knows how many policies that appear legitimate are ghosted. When they do come to light, the ‘broker’ will have disappeared into thin air while their customers are left with insurance cover that is no more than an apparition.
Ghost brokers typically advertise cheap, no-quibble insurance on social websites or forums where particular groups are targeted – hard-up students, drivers with convictions, drivers newly arrived from overseas or ethnic groups for whom English isn’t the first language.
Well organised scams may even run their own websites. Only last month a sophisticated ghost broking network run by two criminals was smashed after taking £680,000 for worthless policies sold at 15% below the cheapest offered elsewhere, according to Automobile Association Developments Limited.
Policies are typically bought by ghost brokers from legitimate providers but with altered details and false contact information for the customer. They may be paid for using false or stolen credit or debit cards, sometimes issued by overseas banks, while the buyer may be asked to pay cash.
Although they will initially appear on the industry’s Motor Insurance Database (MID), phantom policies usually come to light quickly and are cancelled, when they will also be taken off the MID, according to Automobile Association Developments Limited.
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