Understanding ghost broking - insights from our experts

Pete Ward: Hi Kat. It's great to be talking to you today to explore an issue which is very topical but also a real problem for the insurance industry and that's the malign practice of ghost broking. But for those watching that are unfamiliar with that term, are you able to explain what ghost broking means?

Kat Cunningham: So, ghost brokers are a scam whereby the fraudster acts as a insurance broker. They often target young drivers via social media with the intent to sell them an insurance policy, which is ultimately a worthless transaction as it's invalid. The big risk is the insured is driving without insurance, often unknown to them. Ghost brokers typically can act as lone individuals, or sometimes they are part of a wider, organised criminal activity and it can impact both personal lines and commercial insurance policies.

Pete Ward: Unfortunately, it's a real problem, isn't it Kat. So, whilst ghost broking has been around for some time, unfortunately, we are seeing a rise in this activity. You may be aware that we at Aviva, recently interviewed 2,000 young drivers around their shopping habits of buying car insurance via social media, and the results are both shocking and worrying. And our research shows that 30% of those young drivers confirmed that they had bought car insurance via social media. So, almost certainly all of those drivers will have dealt with a ghost broker and have invalid insurance. And 9 out of 10 of those drivers had reported issues with their insurance, for example, invalid details. When they had phoned their insurer to make a claim, they realised that they weren't insured, and in some instances, the young drivers had been pulled over by the police for driving without insurance. So, it's a real issue. But Kat, are you able to elaborate in terms of the type of activity of ghost broking that you and your team have seen in the last 12 months?

Kat Cunningham: Yeah, sadly, I can Pete. What we typically see is the use of stolen or compromised bank accounts or bank cards, and these are used to purchase multiple policies. We can see gross misrepresentation where, the details of use of address, policyholder details, driving history, have been misrepresented. We also see fake documents, proof of NCD or no claims discount. The other thing we see is identity theft. So, where a ghost broker has used clean identities or addresses, sometimes businesses, to set the policy up, and then afterwards they've added on the policyholder -  the fraudster -as an additional driver.

Pete Ward: It really is shocking and unfortunately this practice can dilute the trust that our customers have in genuine insurance brokers. But are you able to elaborate Kat in terms of how customers can fall victim to ghost broking?

Kat Cunningham: Typically, what we see ghost brokers doing is setting up a completely fake policy and providing fake documents. We see them taking out policies and then cancelling them just after inception having paid no premium. We see fake no claims discount documents being provided and policies that have been grossly misrepresented and therefore worthless.

Pete Ward: It's really interesting, but it's also so worrying. Are you able to provide details of what the consequences and what the customer impacts of ghost broking are?

Kat Cunningham: The impacts can be devastating and in some cases, life-changing. When someone is the unknown victim of ghost broker, this can result should the worst happen, they could be fined, they could be convicted, a vehicle could be impounded. There's often links to wider payment card and identity fraud, which impacts a wider group of victims. The victim can often find they have paid the ghost broker a fee or thinking it was premium, and that is worthless because they don't have a valid policy. Victims are left uninsured in the event of a claim and that can result in losses and liabilities for them. And then there's the wider impact of our genuine customers, who end up picking up the tab as a result of increased premiums that everyone pays the price for, for fraudulent activity.

Pete Ward: Clearly, ghost broking remains a real issue and that's why it's great to have discussions like this so we can raise awareness of this practice. But more broadly Kat, you lead Aviva's fraud prevention capability when it comes to application fraud and I wondered if you were able to provide some examples of the types of fraud that you and the team are seeing in this space.

Kat Cunningham: Yes, so in 2023 we identified fraud on over 50,000 motor policy applications. This is up on 2022 by over 60% as we continue to invest and train and develop our capability to detect as much fraud as we possibly can. This is key for us at Aviva to ensure that we're protecting our genuine customers and keeping as much fraud as we possibly can off our books. So, as you know Pete, here at Aviva, we want to spread the awareness of ghost broking activity as much as we possibly can. Are there any practical tips and advice you can offer to those watching on how to avoid becoming a victim of a ghost broker?

Pete Ward: Good question. Our advice for anybody watching this, who knows a young driver who's looking for car insurance is that if a deal looks and feels too good to be true, then it probably is. We would also advise avoiding dealing with anybody who will only communicate with you on social media or messaging apps. And if anybody watching this believes that they've been victim of ghost broking or know somebody that has been victim of ghost broking, then please contact the Insurance Fraud Bureau, contact Action Fraud or alternatively, contact the insurer who you think you're insured with who can then take the appropriate steps to refer this to law enforcement.

Kat Cunningham: Spot on Pete. It's been really useful to have this discussion today, ghost broking is going to continue as an emerging threat, with the increased usage of AI  - is something we're going to have to absolutely stay on top of in the future.

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