30th January, 2023

As household bills continue to rise amid the cost-of-living crisis, fraudsters and scammers are more prevalent than ever. So, it’s important to keep in mind that your cheap insurance policy that seems ‘too good to be true’ just might be…

One of the biggest insurance scams out there is ‘ghost broking’, where a fraudster will pose as a genuine insurance broker in order to sell unsuspecting victims fake insurance policies. The scammer will then take the money and provide no policy at all, or they’ll change all sorts of details on the quote, such as the driver’s address or claims record, in order to get as cheap a price as possible. Either way, you’ve handed over your hard-earned money only to be left at risk due to invalid, or non-existent, insurance.

According to Aviva, their application fraud continues to increase and 15% of all policy fraud is made up by ghost brokers. They recorded a 16% increase in motor policy fraud in October 2022, when compared to the previous year.

So, as financial crime is anticipated to become “even more prolific” according to the Financial Conduct Authority (FCA), what are the warning signs of a ghost broker?

Are they authorised?

If an insurance broker is authorised by the FCA, you should be able to find the registration number on their website or on the footer of any letters that they send you. For further peace of mind, you can also find a list of authorised brokers on the FCA’s website.

If you’re unable to find a brokers FCA number or find their name on the list, it’s probably wise to get your insurance from a more reputable provider.

Do they have proper contact details?

Does the ‘broker’ only communicate with you via social media, or do they only have one phone number or email address?

If the only way that you contact them is through a messaging app such as WhatsApp or with a personal email address, then it’s generally best to avoid doing business with them. Also, check whether they have a professional looking website that states how to contact them.

Is the policy unbelievably cheap?

We all want a policy that’s as cheap as possible, but sometimes it might just be too cheap. Take your time to do some quotes on a few different comparison sites and consider whether the price you’re being offered by the ‘broker’ is realistic.

If it seems so cheap that it’s almost unbelievable, it’s probably because it is.

Are they able to explain why it’s so cheap?

If you question the price, or who the insurance is provided by, your ‘broker’ should be able to put this information to you in simple terms. So, if they’re defensive about explaining things that a genuine company should know, take this as a sign to go elsewhere.

In an age of technological advancements, these fraudsters are constantly finding new ways to exploit those most vulnerable to financial scams. So, before you hand over your money, always be cautious and remember that sometimes that cheap price really is too good to be true.


Written by: Shannan Errington

*Please note that the above information has been gathered through secondary research. The information provided is not based on our opinion. You should seek further guidance and information before making an informed decision.

Sources:
https://www.insuranceage.co.uk/broker/7952034/ghost-broking-still-a-major-problem-as-avivas-application-fraud-rises-16
https://www.newstatesman.com/spotlight/2022/11/insurance-fraud-rising-cost-of-living-crisis
https://www.independent.co.uk/life-style/people-which-city-of-london-police-financial-conduct-authority-b1940057.html