The UK’s largest insurer, Aviva, has raised the alarm on the growing and complex nature of ghost broking scams. We found these scams mostly target young drivers—age 17-25. Fraudulent schemes are becoming increasingly sophisticated on a daily basis. Today, they rely on social media advertisements and AI-generated webpages to lure the unsuspecting victim searching for cheaper car insurance. This year, the insurance company announced a mind-blowing 22% rise in ghost broking incidents compared to last year. This disturbing trend brings to the fore the critical importance of educating likely targets.
Young drivers, particularly in metropolitan areas such as London, regularly encounter insurance costs that are debilitating, with the average driver under 25 paying £3,100 per year. In their desperation for affordable coverage, millions become victims of these scams, with victims losing an estimated average of £2,000. Aviva’s underwriting fraud investigation team lead, Kat Cunningham, voiced the unfortunate truth for victims of ghost brokers.
Understanding Ghost Broking Scams
Ghost broking scams usually offer huge discounts on your premium, with some scammers advertising a policy for as little as £1,000. These fraudsters often appear to be legitimate brokers, pocketing fees of up to £600 per person. In one high-profile example, a bad actor was able to bilk consumers out of £150,000 by peddling 550 bogus policies on the internet.
That’s because these scams primarily operate on the basis of misleading social media advertising. They trick would-be victims to domains that look exactly like established and trusted insurance companies. The locations can even have the names of made-up companies, preventing users from quickly identifying that these sites are not real.
“Typically victims understand they have fallen victim to a ghost broker in the event they’re stopped by the police, they need to make a claim, or they’re in a car accident,” – Kat Cunningham
Victims should not be left with their lives in tatters when they find their insurance has disappeared at the most critical moments. Cunningham explains that this realization can lead to a harrowing experience:
“It’s at that point where there’s a check done on the insurance and [they have] that horrible moment of ‘that really good deal … actually I’ve got no insurance in place’.”
The Rising Threat to Young Drivers
This increase in ghost broking cases is most troubling for the young drivers, who already have a difficult time finding affordable insurance. In one example, a 23-year-old was charged a £586 annual premium for insurance on an Audi A3. Lured in by what he thought was a lucrative deal, the novice motorist became an unfortunate target of one of these cons.
Cunningham stressed how the calculated way fraudsters work creates an uphill battle for new drivers looking to spot legitimate deals. The mix of attractive offers and phony but convincing sites makes a perfect opportunity for bad actors.
Aviva, as you might imagine, is quite interested in this trend. They call on new drivers to avoid taking unnecessary risks in pursuit of cheaper car insurance. The impact of being targeted by ghost broking scams can be drastic and long lasting.
Aviva’s Response and Recommendations
Aviva is doing something about this shocking trend. They’re helping drive behaviour change by teaching consumers not to fall for ghost broking. The company has ongoing efforts to educate consumers on the tactics scammers employ. Most importantly, it helps drivers confirm the legitimacy of brokers before signing contracts or paying any money to them.
We encourage actual and potential victims to do their own homework on any insurance policy you’re thinking about buying. Start by looking to see if brokers are licensed and accredited. Next, make sure every offer you receive is on par with the industry.
Aviva’s aggressive approach on ghost broking is an indication of their consumer-first approach and mission to help protect consumers from fraud. Their company’s mission is to raise awareness about how to recognize legitimate insurance offerings. In so doing, it hopes to cut down on the prevalence of bee scams.