Ghost brokers scam on the rise says LV

David Ross, Editor
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."

Ask HJ

Is it more expensive to be insured as a sole driver?

I have received notification of my insurance renewal from Churchill, which is £408.20 - a 41% increase on last year. I live in Sutherland and my mileage was 8586 last year. I have one car a Skoda Octavia and am the only driver with 20 years NCB and am 79 years old. I understand that being the sole driver with one car is more expensive - why should this be the case?

Regardless of your driving record, most insurers will provide a renewal quote that is higher than the previous year, although 41% is very large increase. We would always recommend getting new quotes at renewal time rather than relying on your existing insurer, even though it is appealing to stay with the same insurer. Generally speaking, adding a second driver to your policy will only reduce your premium if they are seen as a lower-risk driver than you. In this case we would suspect that, in spite of your no-claims bonus and low mileage, your age means you are seen as a higher risk. Drivers in their 50s and 60s are seen as the lowest risk of all age groups, while drivers in their 70s will see their premiums go up with many insurers, and again past the age of 80.

Answered by David Ross

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