Insurance fraud: How can you protect yourself?


As technology gets more sophisticated and we can pay for things through our mobile phones, it seems the fraudsters are also getting smarter, which means you need to be more vigilant. So, to give you a helping hand we’ve compiled this blog giving you everything you need to know about the types of insurance scams you need to look out for, what you can do to protect yourself and what insurance companies are doing to try and put a stop to fraud.

What is insurance fraud?

Sorting out your insurance can seem like a chore, without having to worry about being caught out with different scams or insurance fraud. Quite simply insurance fraud is “any act committed with the intent to obtain a fraudulent outcome from an insurance process.” So now you know exactly what insurance fraud is, what do you need to look out for and how can you prevent it?

What is ghost broking?

Ghost brokers, also known as ‘illegal intermediaries’ sell fraudulent insurance policies to unsuspecting victims. Most commonly these scams happen on car insurance and worryingly appear to be on the increase.

Which shared that The Insurance Fraud Bureau, an organisation funded by insurers to tackle fraud – told them at the end of 2019 that ghost broking accounted for a third of its 65 ongoing cases. They also shared that according to stats from the London Metropolitan Police, victims who fall for a ghost broking scam lose an average of £1,209.

So how does ghost broking work? Typically, salesmen offer cheaper insurance deals to younger drivers. Younger drivers are the target as often their insurance is a lot more expensive. Therefore, by offering a cheaper deal, they are bought into the scam. The victim hands over the money and receives what they believe to be genuine insurance documents. So, on the surface, everything seems perfectly legitimate.

How do the fraudsters get the documents to look genuine? The fraudsters will buy genuine policies from legitimate insurance companies using false information, then change the logos and details, followed by cancelling the legitimate policy shortly afterwards.

How do you know if it’s a fake policy? Unfortunately, people don’t find out they have been scammed until it’s too late, when they go to make a claim or get stopped by the police. Driving under a fraudulent policy may result in your insurance being invalid as you have been driving illegally. You could incur a fine and six points on your license and you most definitely wouldn’t be able to make any claims if you were to have an accident. If you were in an accident you may have to pay any costs and could potentially be found at fault, your vehicle could be seized. Phew! And if all that’s not bad enough, you will have to buy another genuine policy. So, as you can see ghost broking can potentially be very damaging, so we all need to be extra vigilant when purchasing insurance.

How can I spot a ghost broker?

Now we are aware of the potential consequences of ghost broking, the question we are asking is how can we protect ourselves against such scams?

Be mindful about how you encounter the insurance company as some ghost brokers have been known to contact people via Whatsapp as this makes it more difficult for them to be traced. If you are being offered a ridiculously cheap insurance deal, it probably is too good to be true and this should be a red flag. An easy way to benchmark the price you have been given is to look on a comparison website. If the offer the ghost broker has given you is significantly cheaper than through the comparison site, it’s most probably fake and shouldn’t be trusted.

Social media is another place the ghost brokers are contacting unsuspecting victims via running fake advertising campaigns on Facebook, Instagram and Snapchat. The ghost brokers haven’t kept this to just social media, they have been known to put adverts in pubs, clubs, bars and newsagents. Another key lookout is whether brokers are providing mobile numbers or Gmail, Hotmail, Yahoo or Outlook emails as their primary form of contact. This is suspicious and could indicate that they are not working for a legitimate company.

How can I double check my insurance policy is legitimate?

If you have been reading this blog and are concerned that you may have been caught out by a ghost broker, or just want to double check your own policy, it’s easy and simple to do. The company you have bought insurance from should be listed on The Financial Services Register list. This list displays all firms, individuals and other bodies that are currently registered by the Prudential Regulation Authority (PRA). It is advisable to only purchase insurance from companies that are listed on this register.

Another check you can conduct yourself is to see if your policy is listed on the Motor Insurers’ Bureau’s Insurance Database. The database records the policy details of all vehicles insured in the UK. Therefore, if your vehicle is not listed, your policy is not legitimate. If you find yourself in the position where you believe your insurance policy to be fake and you believe you have been sold a fraudulent policy, you need to take action. It is advisable to report the company or individual you have bought insurance from to Action Fraud either online or by calling 0300 123 2040.

What is ‘cash for crash’ fraud?

‘Cash for crash’ is a term used to describe accidents that happen as a result of a group of people deliberately engineering a crash. Unfortunately, these incidents where innocent motorists are forced to crash appear to be becoming more frequent. So how do these crashes happen? Usually these groups of people engineer a situation whereby a car crashes into another from behind and usually, the driver at the back is found guilty. According to rule 126 of the Highway Code you should leave enough space between you and the vehicle in front.

What are these people trying to achieve? Well quite simply they are aiming to claim compensation payments such as injury damage, loss of earnings, recovery and storage as well as claims for bogus passengers. The Insurance Fraud Bureau (IFB) claim that these sort of ‘cash for crash’ schemes are costing the insurance industry around £340m a year.

Are these fraudsters targeting particular cars or vans? It appears that commercial vehicles are targeted more frequently along with older motorists fitting the perception of having comprehensive insurance. So, the million-dollar question, how can you spot these fraudsters and keep yourself safe on the roads? Take a look at the tips below:

  • Always keep a safe distance from the driver in front, even in traffic jams or rush hour
  • Keep an eye out for tailgaters as this can often be a tactic to distract drivers and therefore force an accident. If you feel someone is tailgating you, pull over at the first convenient place to do so
  • Look out for cars with broken brake lights and keep extra distance between them and yourself as if they were to suddenly brake, you wouldn’t know
  • When approaching a roundabout take extra caution of the traffic around you. The stop start environment is a prime location for accidents to be forced. If you drive a large commercial vehicle be extra vigilant as these vehicles are targeted more often
  • When driving on dual carriageways and motorways keep your eyes peeled for erratic driving, especially cars that look like they might suddenly swerve in front of you forcing you to drive off course

What should you do if you think you’re a victim of insurance fraud?

If you believe you’ve been the victim of insurance fraud, then you need to contact the police. It’s advisable to document as much as you can through photographs, documentation and anything else that you think would be useful in an investigation. If you are involved in a collision and you believe the other driver may have done this on purpose, take as much information about the driver as possible and explain the situation to your insurance provider. If you have information on ghost broking, then you need to contact the Insurance Fraud Bureau. Other useful points of contact include Action Fraud, the UK’s national fraud and cyber-crime reporting centre.

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