Consumers warned over ‘ghost brokers’ selling fraudulent policies

Insurers warn there are ongoing risks of “ghost brokers” selling fraudulent policies in Ireland following recent UK reports of a surge in such cases.

Ghost brokers sell cheap insurance to younger or other motorists struggling to get cover, but the policies are based on false information or documents, meaning the buyers are not insured.

Industry experts and regulators warn the problem is an ongoing one here, despite recent successes in detecting it, as fraudsters are growing more sophisticated.

Investigations and fraud manager at Aviva Insurance Ireland, Robert Smyth, said at the weekend that ghost brokers generally target younger drivers, those whose first language may not be English, or people facing difficulty getting affordable cover.

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Central to their practice is falsifying key information, the drivers’ insurance history, no-claims record, or even licence status, to an underwriter to get cover in the first place.

“Let’s say you had five years’ no-claims experience, this person would say you had 10 years,” Mr Smyth said. “But in that situation, in effect you have no cover.”

The false information then becomes part of the driver’s legitimate record when they subsequently go on to renew cover, making the initial fraud hard to detect.

Mr Smyth explained that the false policies themselves may not come to light unless there is an accident, and someone tries to claim against them.

The problem went largely undetected as insurance companies’ investigations units focused on fraudulent claims rather than false policies.

However, in 2016, Aviva set up a team focused on this which identified about 10 illegal brokers, responsible for 1,000-1,500 false policies.

Mr Smyth said a subsequent Garda investigation found one sophisticated illegal brokerage, based in Dublin and run as a legitimate business, that had, among other things, employed a forger.

That inquiry resulted in gardaí charging the individuals involved with more than 300 fraud and money-laundering offences.

Over several years, an Garda Síochána’s special investigations unit estimated an Aviva fraud ghost broker had sold 9,000 policies.

Check online register

The Central Bank, which regulates financial intermediaries, encourages consumers to check its online registers to ensure that brokers are authorised to provide the service they are offering.

The bank encourages anyone with concerns about a broker to report this to it and has published an explainer, What are Ghost Brokers?, outlining what consumers should look out for.

Industry body Insurance Ireland confirmed it was a consistent problem and warned that if a broker was not authorised to sell something, people should not buy it.

“Insurance Ireland proactively engages with An Garda Síochána and other stakeholders on the issue of ghost broking and will continue to do so,” said the organisation.

Action Fraud, the UK’s national reporting centre for suspected fraud and cyber crimes, recently reported that ghost broking complaints increased 10 per cent last year to 694.

The City of London Police and National Fraud Intelligence Bureau-run centre said younger drivers and those whose first language was not English, were among the fraudsters’ targets.