‘Ghost’ car insurance brokers are leaving thousands of drivers without cover.
The warning comes from AA car insurance which says its own fraud team blocks up to a dozen attempts to obtain car insurance by suspected ‘ghost brokers’ 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” say AA 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.
“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. “Last October a sophisticated ghost broking network run by two criminals was smashed after taking £680,000 for worthless policies sold at 15pc below the cheapest offered elsewhere.
“The two men were jailed at the Old Bailey respectively for three years and 12 months. “They used a recording of background office noise to make buyers think they were talking to a legitimate call centre.
“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.
“Often the victims are landed with convictions for uninsured driving and their cars confiscated by police” say AA Car Insurance.
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.
Simon Douglas, director of AA Insurance points out: “If a policy is significantly cheaper than polices available elsewhere, or direct from the insurer’s website, it is probably not legitimate.”
Mr Douglas says the industry ‘ghost busters’ are getting better at identifying criminals but the challenge for the industry is stopping the ghost brokers before transactions are completed.
“For instance, the AA has invested heavily in sophisticated technology to stop the spooks before the damage is done and runs a dedicated fraud team to stop potential ghost transactions.
“We also run a database of thousands of fraudulent attempts to buy insurance and share information with the police as well as other insurers and the banks.
“The industry is working flat-out to spread the net as widely as possible.”
The AA offers the following tips to help avoid becoming a victim or what to do if you have:
Only buy from legitimate sources – if in doubt check with an industry source such as the British Insurance Brokers Association or the Motor Insurers’ Bureau.
Beware of adverts guaranteeing to significantly undercut company prices or offering fixed price insurance. If the price looks too good to be true it probably is.
Treat adverts that provide only email or mobile phone contact with suspicion – and if you suspect you’re a victim, check www.askMID.com to see if your car is registered as being insured.
If it is, check again from time to time because once an insurer realises the policy has been fraudulently obtained it will be cancelled.
If you suspect you are a ghost broking victim, check with the company whose name is on the insurance certificate and contact Crimestoppers on 0800 555111.
Policies bought through a ghost broker will appear on the MID database but if and when the scam is discovered, the policy will be cancelled. If in any doubt, check ‘Ask MID’ (www.askMID.com), putting in the registration number to cross check it with the Motor Insurance Database.
If a ‘vehicle not insured’ alert appears, do not drive the car and check with the company whose name is on the insurance certificate. If in doubt, tell the police, providing as much information about who sold the policy as you can.
*The awareness campaign is a joint initiative between the Association of British Insurers (ABI); the Insurance Fraud Bureau (IFB); the City of London Police Insurance Fraud Enforcement Department (IFED) and Crimestoppers. (Source: AA press release)