Although ghost broking is one of the most common, and lethal forms of insurance fraud, research has found that only 17% of people have ever heard of the term.

David Woodfield – Chief Insurance Growth Officer at Bionic – has created a guide which contains all SMEs need to know when it comes to Ghost Brokers, including:

• How the scam technique works & the signs to look out for
• What to do if your business falls victim to a ghost broking scam
• The most common ghost broking scams

David Woodfield: “ghost broking is a type of insurance fraud which involves fraudsters posing as legitimate insurance brokers and tricking business owners into buying non-existent or counterfeit insurance. Motor and property insurance are 2 insurance industries which are particularly prone to ghost brokers.

SMEs can be the perfect target for these scammers because they might not always have the time or resources to thoroughly check every insurance offer and attractive, low-cost insurance deals can be especially tempting to smaller businesses. .

How does ghost broking work? 

• Attractive offers — Ghost brokers often know how to catch your eye with low premiums or deals – which often seem too good to be true. They might advertise these offers online, in scam emails or even over the phone.
• Fake documentation — Once they’ve attracted your attention, ghost brokers provide fake insurance documents that look incredibly convincing which might include fake policy numbers, official-looking logos, and all the legal language you’d expect to find in a genuine policy.
• Payment and disappearance — After business owners parted with your hard-earned money, the ghost broker simply disappears without a trace. When the business tries to make a claim, you’ll find out that the insurance company has no record of your policy. By then, the ghost broker is long gone, and you’re left to pick up the pieces.

“Some common signs of ghost brokers include: unbelievably low prices, inability to track down a legitimate landline with a clearly stated UK based landline and address and if the insurer reached out over social media or WhatsApp.”

What are some common ghost broking scams?

• Fake insurance communication – scammers will use any method of communication they can, including emails, letters, text messages and social media posts and adverts to offer policies or ask for details to update a current policy. They’re designed to look official and can easily fool you into thinking you’re dealing with a genuine insurer. These ads often promise huge savings on insurance premiums.
• Fake insurance quotes – ghost brokers often provide fake quotes that are significantly lower than genuine market rates. They might present these quotes with convincing documentation and professional presentations. Sadly, it’s all part of their ploy to make you believe you’re getting a fantastic deal.
• Fake no-claims bonus – some ghost brokers will entice small business owners with policies that include a fake no-claims bonus. They manipulate your information to make it appear as though you have a no-claim history, which reduces the quoted premium. This can make their offer seem more attractive, but it’s all smoke and mirrors.

How can businesses protect themselves from ghost brokers? 

• Buy from a reputable insurance website  – Always purchase insurance from reputable, well-known insurance companies or brokers, like Bionic. We work with a trusted panel of insurers to bring business owners the most competitive deals. It’s always best to do your research, check reviews and ratings, and make sure the company has a great track record. Remember, don’t be swayed by deals that seem too good to be true as they usually are.
• Check the Financial Services Register – Before committing to any insurance purchase, check the Financial Services Register to verify that the broker or company is authorised by the Financial Conduct Authority (FCA). This is an important step to ensure that you’re dealing with a legitimate broker and insurer.

What should business owners do if they fall victim to a ghost broker? 

• Contact the police – report the fraud to the police immediately. The police can investigate and potentially track down the scammers. The more information you can provide, the better, so try to have all the details ready when you make the report.
• Gather evidence – Collect all communications, documents and receipts related to the scam. This evidence is crucial for investigations and any legal actions that might follow. Save everything — emails, text messages, screenshots of websites, payment receipts, and any other correspondence you had with the fraudster. The more detailed your records, the easier it will be for the authorities to investigate.
• Get in touch with the insurance company – Next, if the ghost broker has impersonated a legitimate insurance company, contact them to tell them about the fraud. The insurer can guide you on the next steps, and in some cases, they might be able to offer you temporary coverage or other assistance while things are being sorted out. They’ll also want to make sure that your other policies are secure and haven’t been tampered with.
• Check your credit report – Review your credit report for any unusual activity. Ghost broking scams can sometimes lead to identity theft, which can impact your credit score. It’s a good idea to request a detailed credit report from all major credit bureaus — look for any new accounts or credit inquiries that you don’t recognise and report any suspicious activity immediately.
• Seek legal advice – Consult with a legal professional to understand your rights and options. Dealing with the aftermath of fraud can be complex, and having a solicitor on your side can make a big difference. They can help you navigate the legal implications of the fraud, guide you on how to protect yourself moving forward and assist with any claims you might need to make. They can also advise on whether you have any recourse to recover your lost money.

See the full guide onsite at the following link: https://bionic.co.uk/business-insurance/guides/everything-to-know-about-ghost-brokers/