What are ghost brokers?

Insurance seems to be little more than a piece of paper, until you need to make a claim. Each year many people get a nasty surprise when they discover that their policy is literally just a piece of paper, sold by a ‘ghost broker’ fraudster who pockets their premium without setting up the promised cover.
 
Ghost broking can be a particular problem if you’re searching for convicted driver insurance. If you have a driving conviction, cover can be more expensive which is why people search around for the cheapest option.

This is when the ghost brokers strike, offering seemingly good cover for unbelievably cheap prices. And you know what they say about things that look too good to be true…
 
So how does ghost broking work, and what can you do to avoid falling foul of the criminals when buying convicted driver insurance?
 

What are ghost brokers?

Ghost brokers pretend to be legitimate insurance sellers, but in reality they issue fake policies. Insurance is often sold by brokers, who buy policies in bulk from an insurance company then sell them on to individual policyholders.
 
Ghost brokers might buy legitimate policies using false information, then sell on amended copies. For example, the ghost broker might tell the insurer that you have a different age, occupation or driving history in order to secure a lower premium.

The ghost broker keeps the difference between what you pay and what the insurer charges, but unfortunately the false details mean the policy is likely to be invalid.
 
Another common practice is for ghost brokers to submit accurate details for a policyholder, put the policy in place but then cancel it later, keeping the refunded premium for themselves. It is only when the policyholder goes to make a claim that they find the policy has been cancelled.
 
Alternatively, ghost brokers sometimes create entirely fake documents from scratch, designed to appear as if they have been issued by a real insurer. These criminals often offer highly attractive deals that seem too good to be true, so consumers snap them up without asking too many questions. 
 A person sitting using a laptop suspiciously in a dark room

Who are the main targets for ghost brokers?

Criminals are often very clever in how they find victims to exploit. They go after people who pay more for their insurance, because these groups are more likely to be tempted by discount rates. Drivers with a conviction, younger drivers and older motorists are all common targets.
 
Fraudsters exploit online anonymity to find victims without being traceable. They may place adverts on student chat forums and sites, on university notice boards and other money-saving forums. They find similar ways of targeting older motorists, too.

Criminals may find ways of identifying people who have been searching for insurance online, then contact them through a messaging site, offering an attractive insurance deal.
 
Ghost brokers also approach people in pubs and bars, hoping to catch people when their guard is down. For example, they might hang around a pub that is popular with students.
 

Why ghost brokers are booming under Coronavirus

Fraudsters know how to spot an opportunity, and they have spotted one in the COVID-19 pandemic. The Insurance Fraud Bureau has issued a warning that drivers need to be on alert to this form of fraud and check carefully to make sure a broker is valid before buying insurance.
 
Many drivers will be looking for insurance after being off the road for a period during lockdown, while others will be hunting for a bargain after being on furlough or losing their job. Under financial pressure, drivers may be tempted to take up a ghost broker on a knockdown policy price.
 

The consequences of using a ghost broker

Being tricked by a ghost broker not only means you are potentially the victim of a crime – you could also get into trouble with the police yourself.

Driving without insurance is a serious criminal offence, punished by a £300 fixed penalty and 6 penalty points on your licence, or, if the case goes to court, more severe consequences such as an unlimited fine and disqualification from driving.
 
If you are a driver with a past conviction for a driving offence, police may be less likely to issue a fixed penalty notice, or believe that you have been tricked by a ghost broker. It really is not worth the risk of being caught without valid convicted driver insurance purchased from a trusted broker.
 
In addition to trouble with the police, you could be hit financially if you’re found to be driving without insurance.

In the event of an accident, you could be personally liable for compensation for personal injury, damage to property and legal costs – potentially running into millions. At the very least, you would have to foot the bill in full for damage to your own vehicle.
 A man signing a document with a broker pointing at it

What should you do to avoid ghost brokers?

Perhaps the best way of avoiding a ghost broker is to use your common sense. If a deal seems too good to be true or something about a broker does not seem quite right, it’s better to walk away than risk the consequences of having invalid insurance.
 
Before taking out a policy, you should check there is a valid website for the broker with a UK phone number and address, check the broker is listed with the British Insurance Brokers’ Association or that they’re a member of the Motor Insurers’ Bureau. You could also check to see if the insurance advisor is registered with the Financial Conduct Authority.
 
To report a suspected fraudster or dodgy advert, ring Cheatline on 0800 4220421.
 

How can you tell if your policy is valid?

If you have bought a policy but have suspicions about whether the seller was a ghost broker, it’s best to act immediately. Contact the named insurance company (not the broker) to ask if they can confirm if they hold a policy in your name with your relevant details.
 
You can also look on the Motor Insurers’ Database for details of whether your vehicle is insured, although this only tells you if insurance is in place – it could still be invalid if the details given by your broker were wrong in order to save money on the policy.
 
It is vital that you do not drive your car without valid insurance. You should arrange genuine cover to replace the fraudulent policy – you may wish to take out a short-term cover option while you arrange an annual policy.
 
Don’t fall for a scam. Take out quality convicted driver insurance from Insurance Factory today.

Policy benefits, features and discounts offered may very between insurance schemes or cover selected and are subject to underwriting criteria. Information contained within this article is accurate at the time of publishing but may be subject to change.