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New form of motor insurance fraud - beware

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The BBC reported on it’s website recently about a new form of fraud, which takes advantage of the fact the car insurance costs have significantly risen recently, the fact that young drivers are particularly hard hit by these costs and the “gotta have it” culture which results in people taking risks.

The two forms of the fraud, collectively described as “ghost broking” in essence are:

Online scams from people holding themselves out as insurers or brokers, which is similar to boiler room fraud with shares – websites can be set up quickly and anonymously and taken down quickly as well.

Scam brokers claiming they can get discounted insurance through internal connections, insisting on a sizeable upfront payment – they then give false information to the insurers such as that the applicant is a lot older, has a no claims history, works in a different profession.

Axa, one of the biggest UK insurers has apparently estimated that 20,000 motorists may be driving with fraudulent insurance policies.

A new City of London police fraud unit has pledged to “tackle the problem head-on”.

The “ghost brokers” operate through websites or small ads offering cheap insurance.

The BBC said they target young motorists who face rocketing premiums and communities where English is not the first language and where there is a lack of understanding about the way the insurance industry works.

In some cases they issue completely fictitious policies. In other cases they apply to genuine insurance companies for cover on the customer’s behalf, but alter personal details such as age and address which would otherwise push up the cost.

Det Supt Bob Wishart of the City of London police said: “Ghost broking is an emerging threat within the insurance fraud arena, costing the industry millions of pounds, leaving companies exposed and meaning thousands of people are unknowingly uninsured.

“This new criminality is particularly prevalent in motor insurance, with fraudsters looking to capitalise on what is a compulsory and sometimes costly product.

“We will soon have a new police unit specifically to tackle insurance fraud. Ghost broking is a growing part of this problem and tackling it head-on will be a priority.”

By personal injury specialist, Sam Ord