Ghost Brokers are people who claim to be legitimate insurance brokers, but who are in fact fraudsters. They issue what they say are legitimate insurance policies, but these are fake. They pocket the premiums and, eventually, disappear.
They prey mainly upon younger motorists, by offering quotations for cover which greatly undercut those of legitimate companies. The unfortunate people who buy these policies are in fact uninsured, and this can have devastating consequences for them. Not only can they find themselves in deep financial trouble if they are involved in an accident, but they can also face charges of driving without insurance. This is what is known as an 'absolute offence'; in other words the driver is either properly insured, or not. Even if the offence is committed as a result of someone else's fraudulent activity, the poor unsuspecting driver is almost certain to be found guilty and although there are undoubtedly extenuating circumstances which could affect the sentence that was imposed by the court, this offence would still be notifiable to any future insurer, and would probably have a very adverse effect on premiums.
How do they get away with it?
Many of them have had experience of working in a car insurance office, so they understand what they need to do to create a convincing image. They work out of temporary offices, usually giving the owners false names, and they use mobile phones, which are virtually impossible to trace. They then hope to just disappear when their deception comes to light. Some of them though are not terribly bright, and they rely on sheer cheek to bluff their way through. There is an interesting article here
about how an experienced claims handler who turned to fraud; on this occasion he tried to cheat the insurance companies rather than motorists, so was caught by their security systems, which as an insurance professional he should have been aware of. There is also some excellent advice
here by the City of London police on how to avoid falling victim yourself, plus a report (behind a paywall, sadly!) in the Daily Telegraph.
How do they get their business?
A favourite technique has been to advertise in Google ads, and on Facebook. The fact that a Google ad comes at the top of search engine listings gives them a great deal of credibility, and coupled with an apparently very cheap premium it can be highly tempting for motorists to buy a policy, even though they may not have heard of the broker. Some of them set up websites of their own, but others only have a Facebook page; despite this people are still falling victim to them and over the last three years more than 850 complaints of ghost broking were made to Action Fraud. The true number is no doubt far higher than this, since many people may well have had no cause to make a claim and may have remained blissfully unaware that they were in fact uninsured.
Even worse are those criminals who actually impersonate an existing, real broker. Car Insurance 4
are a genuine company running a completely ethical business, but in 2018 fraudsters stole their identity and set up a false page on Facebook, complete with their name, address and logo, but with a mobile telephone number of their own. Despite complaints to Facebook it took more than six weeks for the page to be taken down and it is not known just how many motorists were defrauded by this.
How to avoid becoming a victim
Be very wary of websites that advertise unrealistically low premiums. If it looks too good to be true, then it probably is.
Remember that a genuine company will have a proper landline telephone number. Do not deal with any company which operates out of a mobile phone.
Every insurance broker that operates in the UK has to be registered with the Financial Conduct Authority and must display their registered number on their website. You can check that the company is actually registered by looking at this number on the FCA's website. Do bear in mind the warning about clone brokers however.
If you buy a policy through a recognised price comparison engine such as moneysupermarket.com, confused.com, prudentplus.com etc then you can be reasonably sure that the companies concerned have been properly vetted.
Is this a serious problem?
During the last three years it has been calculated that more than £600,000 was stolen between 2014 and 2017; with males aged between about 20 and 29 being the main targets of these fraudsters.