What is ghost broking?

Figures reveal that total losses to so-called ghost brokers rose to £1 million in 2021, with victims losing an average of £1,950 each. Here, we look at the rise of ghost broking, the consequences, and how you can avoid being caught out.

Ghost broking is a type of insurance fraud scam that targets drivers looking for cheap car insurance. The criminals involved will either sell fake policies to unwitting drivers or falsify information given to insurers to reduce the premium cost, leaving drivers without valid car insurance.

For drivers scammed by ghost brokers, there are serious consequences that could lead to even more expensive car insurance in the long-term.

All drivers are potential targets for ghost brokers, but Action Fraud has revealed that victims are more likely to be young drivers. In 2021, nearly one third (32%) of all reports came from drivers aged between 17 and 19 – an annual increase of three percentage points.

How does ghost broking work?

Methods vary, but the scam is fundamentally the same. Fraudsters will pretend to be a broker for a genuine insurance firm (hence the term ghost broker), offering drivers cheaper insurance if it’s bought through them.

Typical methods used by ghost brokers are:

Forging documents

Criminals sell fake car insurance policies that look legitimate, usually from well-known insurance firms. In reality, no such policy exists.

Falsifying information

Scammers buy genuine car insurance policies but use incorrect information to decrease the premium. Those genuine documents are then altered to show the victim’s real information so that unwitting drivers think the policy is authentic.

Cancelling policies

Criminals will buy a real car insurance policy using the driver’s correct details but will cancel the policy soon after and pocket the refund.

Not all experts agree that this method is a type of ghost broking, but as it’s a common scam, it’s often included as an example of a typical tactic.

Clone firms and individuals

Clone firms operate by creating fraudulent entities that mimic legitimate insurance brokers. They may duplicate the details of established and reputable insurance brokers, including their names, addresses, and websites, to convince you that they are a legitimate business you should buy insurance from.

However, once individuals provide personal and payment information, these clone firms either disappear with the funds, leaving victims uninsured, or issue fake insurance policies that provide no actual cover.

What are the consequences of ghost broking?

If you’re the victim of a ghost broker, the bottom line is that your policy will not be genuine. If you try to make a claim, the insurer can refuse and void your policy (this means it will be as if the policy never existed).

If scammers used the cancellation method, the policy won’t exist anyway, so you won’t be able to claim either. Regardless of the method used, the result is that you are technically driving without valid insurance, which is illegal.

Unfortunately, driving without insurance is considered a ‘strict liability’ offence (also known as an ‘absolute liability’). This means you can be considered guilty even if you didn’t intend to commit a crime.

If you’re caught without valid car insurance, you could face:

A £300 fixed penalty notice
Six penalty points added to your driving licence
A £150 fee to retrieve your car if it’s impounded

If you’re taken to court, you could face an unlimited fine, and your car could even be destroyed.

Plus, don’t forget that, as well as the consequences, you’ll have paid for a false policy in the first place – money you’re unlikely to get back. Also, remember that if an insurer voids or cancels your policy, you could struggle to find affordable car insurance at renewal.

What are the warning signs of ghost broking?

One of the biggest tell-tale signs of a ghost broking scam is that if a deal seems too good to be true, it usually is. Especially if you’re considered a ‘higher risk’ driver, this can include young drivers under 25 years old or anyone with previous driving convictions.

As a rule, if you fall into one of these categories, you can expect to pay more for your policy as there’s a greater risk of you making a claim (as far as insurers are concerned). So, if someone approaches you offering considerably cheaper car insurance, just be aware that it could be a ghost broking scam.

Other signs to watch out for include:

communication via messaging apps and social media platforms, including WhatsApp, Snapchat and Facebook;
adverts on unofficial money-saving websites, social media pages or student advice forums;
being approached directly by ‘brokers’ in bars or pubs.

How can I protect myself from a ghost broker?

You can lower the risk of falling for a scam by taking a few simple precautions.

Buy car insurance from a reputable website

Comparison websites let you search for quotes from a wide range of insurers. If you see a policy you like, you’ll usually be redirected directly to that insurer’s website to buy the policy.

If you do this, check that the insurer is a member of the Motor Insurers Bureau. By law, all firms that underwrite car insurance policies (in other words, the firms that assess and calculate risk) must be registered.

Check the Financial Services Register

If you decide to use an insurance broker, you should make sure they’re registered with the Financial Conduct Authority (FCA). By law, anyone carrying out ‘regulated activities’, which includes arranging insurance, must be authorised and registered. If they aren’t, they can be imprisoned and fined.

You can check that a broker or advisor is authorised by searching for them on the Financial Services Register. The ultimate insurer should also be found on this register.

Some, but not all, brokers are also registered with the British Insurance Brokers’ Association (BIBA). The organisation represents the interests of brokers with members voluntarily agreeing to abide by certain standards.

Similarly, insurers can be members of the Association of British Insurers and their membership directory can be found here.

Be alert to unconventional communication methods

Ghost brokers tend to use messaging apps to communicate as this can help keep them anonymous. Genuine brokers, insurers, and financial advisers will generally use more conventional (and professional) communication methods, such as email.

Similarly, ghost brokers often use unconventional advertising methods - for instance, notice boards at colleges or universities, pubs, or even in newsagents’ windows.

What should I do if I’m a victim of ghost broking?

If you’ve been sold a fake policy, you must arrange genuine car insurance immediately. Remember – it is illegal to drive without a minimum of third-party car insurance.

You should also report your concerns online at Action Fraud or call them on 0300 123 2040. You can also contact the Insurance Fraud Bureau online or on 0800 422 0421.

How can I check my car insurance policy is genuine?

If you’re worried about whether or not your car insurance is legitimate, you should call the insurer on the policy. They will have a record of all the policies they’ve sold and will be able to confirm if it is real or not.

You can also check whether your car is insured on the Motor Insurance Database.

What other car insurance scams are there?

Sadly, ghost broking isn’t the only type of insurance fraud carried out by criminals. Two other popular scams used to target victims are:

Crash for cash

This is where criminals purposely cause an accident with an innocent driver to make a false insurance claim.

A typical crash for cash scenario involves staged accidents, for example, where criminals suddenly brake, causing an innocent driver to crash into the back of them. The fraudsters can then submit a claim, exaggerating the damage and injuries caused.

In some cases, criminals stage accidents between themselves and then submit a claim.

Flash for cash

This is similar to a crash for cash scam in that criminals set up innocent drivers to create an accident. In this scam, fraudsters will flash their headlights to indicate they are giving way but then purposely drive into the car they’ve just flashed. Criminals can then claim against the innocent driver.

How can I avoid staged accidents?

Criminals look for vulnerabilities, including targeting older drivers or parents at busy times such as the school run. While there’s not a lot you can do to stop a very determined criminal, you should keep your distance from the car in front of you as much as you can. Also, be mindful of where other cars are in high-traffic areas, such as roundabouts and junctions.

When it comes to other cars flashing their lights, don’t feel pressured to move; only proceed if you’re sure that it’s safe to do so.

Find great value car insurance you can trust

Car insurance is a legal requirement, and taking the risk on a policy that might or might not be legitimate can leave you facing serious consequences.

To avoid being scammed, always use a reputable comparison site or independent insurance broker such as Alan Boswell Group. Our experience means we can help you find good value car insurance that gives you the cover you need, as well as peace of mind.

To see how we can help, speak to a friendly member of the team.

Speak to us: 01603 649700

What is ghost broking?

In this article

In this article