£3bn Per year and rising; this is the estimated cost that insurance fraud costs the UK market with Ghost broking set to add to that figure. We explain more about the latest scam which renders your policy null and void in the event of claim. Find out how so many have been caught out and what are the tell tale signs of a ghost broking trap.
Everyone wants a cheaper car insurance policy whoever you are and whatever your background – rich or poor, young or old, male or female. It is natural to want a good deal and save yourself some of that hard earned money. It’s no exception in today’s financial situation where the large insurance companies are doing whatever they can to increase the price of policies with younger motorists and women especially being hit hard. Due to this many motorists looking are desperate for a budget deal, but this has led to ‘Ghost Broking’ rearing its ugly head.
This relatively new scam has been exposed by getting more publicity recently after industry officials highlighted that there is a huge potential risk that many drivers currently on the roads could be driving uninsured after having been conned into paying for a invalid car insurance policy. An initial study has shown that those who do not speak English as their first language have been targeted due to them being perceived as vulnerable targets – especially if they are young and desperate to get their car on the road.
The operators of these scams are using ads and websites – even in very popular, big named directories and then often falsely inventing policies with the ‘customers’ details reporting that they have secured a cheap deal and just sending fake documents that are supposed to represent a car insurance policy.
Another more slightly sophisticated method is by applying to actual car insurance companies on the customer’s behalf but omitting key details i.e. past convictions or car modifications. They may also change the factors that cause the policy quote to be high i.e. their age or type of car. The scam artist will then tell their customer of the cheap quote, get their commission or ‘fee’ and when the policy documents turn up via post the person will either not notice by not checking the details thoroughly or a lot of the time the policy holder has no real idea that by modifying or omitting vital details means that their policy would be completely invalid if claimed on.
There have been many stories where people have been completely shocked when they go to claim on a policy after an accident, only to find out they have no actual policy – or what they do have does not cover them for any costs or compensation. Many find this a very stressful time as they have to deal with their accident and any injuries from that, as well as the shock of not actually being insured which itself is an offence and they could be prosecuted, as well as having to find the money to cover the damage to their own car and/or the other party. This is why there has been an attempt to publicise this scam due to its potential implications for the car driver.
Unfortunately there doesn’t see any sight of this scam or any other scam relating to car insurance policies going away any time soon, in fact it continues to grow due to the potential return for the criminals and the huge pool of people out there that are desperate to save money on the massive quotes that are being given across the industry.
We have seen other scams in the past 12 months relating to fraudulent whiplash claims and crash-for-cash deals that focus on the motorists who lack in education and knowledge in the complicated car insurance claiming industry.
All of these scams mean that the effectively motorists are not actually purchasing car insurance policies and so the insurance companies are looking to increase policy costs even further to ensure they maintain their profit levels – which compounds the problem even further, forcing people to look for ways to cut the cost.
If you come into contact with a ghost broker or know someone that has, it is vital that you contact the authorities so they can investigate and hopefully shut them down before they cause any further damage to anyone else. There is even a new fraud unit in London set up specifically to tackle this problem as general insurance fraud cost us over an estimated £3bn per year.
If you want to be extra vigilant you can contact the FSA to ask for a list of insurance brokers that are valid and regulated before you commit to going with them. This will also help the authorities in keeping a close watch on the criminals that operate in this area.