What is ghost broking? Drivers warned about fake insurance scam

Motorists are losing hundreds of pounds in a new scam which targets drivers' insurance policies.

So-called 'ghost brokers' are fraudsters who sell drivers supposedly cheap motor insurance deals but hand out policies that aren’t worth the paper they’re written on, says the Insurance Fraud Bureau.

They may use part of the drivers' correct details but often falsify information, such as their address or age, to bring down premiums, reports Wales Online

Usually the scam works in one of two ways:

• Policies are bought from legitimate insurance companies using false information and then fiddled before being sold on to customers.
• Fake policy documents designed to look like they have been issued by legitimate insurance companies are created and sold on to customers
• The consequences of buying a fake policy can be the same as having no insurance policy at all:
• Your car could be seized by police
• You’ll pay a fixed penalty notice of £300
• You’ll have to buy valid insurance and pay at least £150 to get your car back from the pound
• You could be liable for any damage you cause while driving without insurance, which could include compensation if you injure someone.

How to beat the criminals:

Malcolm Tarling from the Association of British Insurers advises people to use their common sense.

He said: “Basically when buying insurance it’s important to make sure it is from a reputable source.

“If someone approaches you in the car park of you local supermarket and someone offers you the latest a Disney DVD and insurance it is probably too good to be true- that has happened, avoid the man in the pub situation.

“You don’t need to take a chance to save money because it is an extremely competitive market.

“It is an issue the industry is fully aware of and is working to crack down on.”

Here is some advice:

• Find a legitimate broker using the BIBA website and make sure your insurance adviser is on the Financial Services Register
• Beware of purchasing insurance policies from unusual sources such as social networks, newsagents or bars and pubs
• Check your insurer is a Motor Insurers’ Bureau (MIB) member

Ben Fletcher, from the Insurance Fraud Bureau, said some of the fake websites set up by scammers appear genuine, while others are clearly fake and are usually advertised through social media.

He urged people to ensure websites are regulated by the Financial Conduct Authority (FCA) before handing over details or money.