Drivers Sold Fake Car Insurance Policies

Thousands of drivers sold fake Insurance

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Police arrested 27 people, who are sold fake motor insurance policies.  More than 170 officers, led by detectives from the City of London police's Insurance Fraud Enforcement Department, carried out 28 search warrants in a series of dawn raids across the country.

The City of London Police said the raids were the culmination of months of investigation into the sale of non-existent motor insurance – a relatively new but growing scam known as "ghost brooking". The arrests were made in Leicesters hire, London, Manchester, Thames Valley and the West Midlands, with 168 officers taking part in the operation.

"Ghost brokers" typically target young, newly qualified drivers by offering them bargain-basement deals, but no insurance is ever put in place and the victims only become aware that they have been duped when they submit claims that are not dealt with. Because they do not have valid insurance, they run the risk of having their cars seized by police as well as racking up fines, penalty licence points and even criminal records, police warned. In the most extreme cases, victims might be forced to pay costs which could run to millions of pounds if, for example, they were at fault for a crash in which a third party was injured.

IFED is a unit operating within the City of London police funded by insurance companies belonging to the Association of British Insurers (ABI). Initial estimates suggest that thousands of motorists have been duped although the true scale of the problem is not known as many drivers will assume their cover is legitimate.

The bogus policies are often sold online – often through social networking and even phony websites – as well as genuine classifieds and even in university clubs and bars and motor repair shops. The police said many ghost brokers claimed to be linked to reputable companies or advertised their "businesses" as independent insurers. Documents and certificates of motor insurance are often faked.

Kerry Michael, director of insurance services at the RAC motoring group, said: "This is a new and worrying crime which preys on young drivers offering them cheap insurance rates with bogus policies. It is particularly worrying when you consider that many of the individuals taken in by 'ghost brokers' are those who can least afford the devastating financial and personal consequences of being involved in an accident without valid insurance."

The RAC advises buyers looking for cover to choose a reputable motor insurer and to ensure they check all of their paperwork. Michael went on: "If a deal sounds too good to be true then it probably is. The RAC's Report on Motoring 2013 identified that 71% of drivers aged 17 to 24 believe that motoring may actually become a rare luxury for them if costs continue to escalate. We are looking at ways to reduce the cost of insurance for young drivers including solutions like low-cost telematics and we are working with the government to understand what can be done to make owning and operating a car more affordable for this group of motorists."

The ABI is urging drivers to avoid falling victim to scams by checking that their insurance adviser is on the Financial Services Register before buying a policy. It is also warning them to beware of insurance policies offered through social networking websites, pubs, clubs and bars, newsagents and motor repair shops.


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