What Is A Ghost Broker?
’Ghost broking’ is form of insurance fraud which involves an illegal insurance intermediary. The ghost broker purchases a policy on behalf of others but purposefully misrepresents important information in order to reduce the price of the policy.
How Do Ghost Brokers Operate?
Ghost brokers operate in the following ways:
- Policies are bought from insurance companies using false information and may be changed before being sold on to customers.
- Fake policy documentation may be created to look like they have been issued by legitimate insurance companies and sold on to customers.
- Ghost Brokers often produce fake No Claims Bonus documentation or alter a customers’ authentic document to obtain insurance.
- Typically the policyholder will be charged a fee by the Ghost Broker on top of paying the insurance premium.
Any of the above scenarios will result in an invalid valid policy, which can subsequently be cancelled or declared void when discovered by the insurer.
Because they are not widely recognised, “ghost brokers” can cause major problems with insurance policies. Gardai reported that in January 2019, 7 “ghost brokers” alone were responsible for up to an estimated 9,000 invalid motor policies. 1
How to Identify a Ghost Broker
Avoid paying for an invalid insurance policy by learning to identify the signs of a “ghost broker” and how to report them.
There are many ways to identify if your intermediary may be a “ghost broker”:
- Location: They may not have an office address, and therefore may ask to meet in a public place or call to your home
- Advertising: “Ghost brokers” have been known to use social media groups or classified advertisements on sites used for individuals selling items.
- Phone Number: They may only use a mobile number, as they have no business landline, or even use Whatsapp
- Email: They may not have a business email and use their own e.g. Gmail/Hotmail account
- Criteria: They ask fewer questions than a genuine insurer
- Deposit: They look for a large amount of cash up front as a “deposit” without giving a receipt
- Cheaper: Premium may be significantly cheaper than other quotes obtained by the potential customer
- Authorisation: They can’t provide any evidence they are an authorised intermediary (All insurance intermediaries must be registered with Central Bank and can be checked on the Central Bank of Ireland website)
- Documentation: They offer to provide documentation for the customer. e.g. Proof of No Claim Bonus. They may also only provide an Insurance Certificate and Disc and not the additional documentation that insurance companies are required to issue
How to Report a Ghost Broker
If you believe you have discovered a “ghost broker”, check with the relevant insurance company to find out if the intermediary is authorised to sell policies on their behalf. If they are not, or you have found a suspicious advertisement, you should immediately contact your local Garda Station to report the suspected “ghost broker” or advertisement.
This guidance is for general information purposes only. Allianz accepts no responsibility or liability for any losses that may arise from any reliance upon the information contained in this guidance.