Don’t get haunted by the ‘ghost’ insurance fraudsters
IF YOU’RE in the market for car insurance you must read this story. Express reader Luke got in touch this week with a salutary tale that highlights the dangers of choosing the cheapest online deal. After years of loyalty to the same insurer, Luke decided he would shop around for his new car insurance. He had received penalty points for using his mobile phone whilst driving which affected his insurance premium. So he took to the internet and found a broker claiming to specialise in competitive insurance deals where the driver has penalty points.
Luke completed the online form and was contacted by the broker.Two days later the broker confirmed they had obtained a competitive quote. Within three days Luke received a pack of documents from the insurer (a household name).
Four months later Luke was stopped by the police who had caught him on a plate recognition camera, revealing he was not insured. After speaking to the insurer, it became clear he had been scammed.
This is what is known as a ghostbroking scam. The fraudster really did set up the policy for Luke with a reputable household insurer. However, in order to obtain a competitive quote, the insurer was not informed of his penalty points.
Once the fraudster knew that Luke had received the documents, he contacted the insurer and cancelled the policy to obtain a refund.
I have an issue with Luke’s case (which is why I have not named the insurer). The insurance firm should have known they were dealing with a broker not registered on the financial services register, and questioned the direct payment from the broker.
In my view the insurer therefore must accept some responsibility. I’ve advised Luke to go to the Financial Ombudsman.
How to avoid ghost brokers:
l Find a legitimate broker via the British Insurance Brokers’ Association (biba.org.uk) and check your adviser is on the Financial Services Register.
l Beware of buying insurance policies from unusual sources such as social media, newsagents or pubs.
l Check your insurer is a Motor Insurers’ Bureau (MIB) member.