Ramping up identity checks is vital to uncover ghost brokers – Recent survey by LexisNexis Risk Solutions
Wed Mar 8 2023
Only 40% of Irish insurance policyholders think they would be fined if they are a ghost broking victim, as social media provides growing opportunity for fraudsters to target vulnerable drivers, warns Shane McCabe, strategic account manager, Insurance, Ireland, LexisNexis Risk Solutions
Despite targeted efforts by An Garda Síochána and Insurance Ireland to educate Irish motorists on the dangers of ghost brokers, almost a quarter (24%) of motorists still do not think they would lose the money they have paid for their insurance if they fell victim to a ghost broking scam[i]. While 83% of people do understand that their car insurance would be void, only 40% think that they could face a fine. Ghost brokers, criminals who pretend to be genuine insurance brokers in order to sell fraudulent car insurance, are costing Irish motorists dear, pocketing thousands of euros[ii] often from vulnerable young drivers. More needs to be done to stop them in their tracks.
The ever-expanding social media and chat platforms are increasing the opportunity for ghost brokers to advertise to vulnerable insurance buyers en-masse. Meanwhile, remaining hidden behind a screen and camouflaging their identity online, criminals believe the risk of getting caught is low. All this helped contribute to 55,000 application fraud submissions last year according to a recent Market study webinar on this subject[iii].
Fraudsters will offer cheaper insurance premiums, often via social media, posing as brokers for well-known insurance companies, claiming they can offer legitimate car insurance at a significantly cheaper price. However, insurance documents may be forged or the details may be falsified to artificially bring the price down. A genuine policy may be taken out but then cancelled soon after and victims only realise their policy is not genuine when they try to make a claim or are stopped by the Garda. At this point, after identifying a driver without a valid insurance policy, the Garda could seize the ghost broking victim’s vehicle, yet worryingly, only 26% of motorists think their car could be taken and potentially crushed. This scenario is assuming a minor motor claim. The financial and emotional consequences could obviously be far worse if a serious crash has taken place and the unwitting victim finds themselves without insurance.
Consumers would be well-advised to check who they are dealing with using registers such as those offered by the Central Bank of Ireland[iv]. By the same token, the importance of front-end identity verification checks by insurance providers cannot be overstated. This process tends to rely on public records and shared industry data but now email address intelligence can add an additional layer of insight, helping to provide an instant indication of fraud risk at the point of quote.
LexisNexis® Emailage® Rapid, now available in the Republic of Ireland, is a fraud risk scoring solution based on the email address and other personal information provided during the application process. It offers a rapid indication of whether the proposer’s identity is genuine or whether it could be fraudulent leveraging billions of transactions from global payment processors and other online industries, including over 82 thousand fraud events shared on average daily[v].
By evaluating email address metadata points, such as whether the email and domain even exist, or whether the email bears a close resemblance to the proposer’s name for the policy, it can offer the flags for application fraud and reveal the ‘camouflaged’ ghost broker.
As 55% of insurance fraud departments are affected by ghost brokers[vi] and the popularity of social media continues to grow, it appears there is no easy fix to the problem, the industry needs to think outside the box. While the Garda and insurance bodies need to continue to raise awareness amongst young drivers perhaps by using social medial influencers or asking driving instructors to spread the word about the threat of ghost broking, insurance providers can increase front-end checks. After all, the more the industry can do to really protect genuine customers, the more it can pass on to them through lowering premiums.
[i] LexisNexis Risk Solutions questioned 1000 Irish Motor Insurance Policyholders, November 2022 through Maru/Hub.
[ii] Every victim to a ghost broker loses £2000 – Markerstudy Ghost broking webinar https://www.markerstudy.com/brokers/news/2023/january/27/ghost-broking-webinar
[iii] There were 55,000 application fraud submissions in 2021 – MarketStudy Ghost broking webinar https://www.markerstudy.com/brokers/news/2023/january/27/ghost-broking-webinar
[vi] A poll Markerstudy ran on LinkedIn found: 55% of insurance fraud enforcement department cases have been affected by ghost brokers https://www.markerstudy.com/brokers/news/2023/january/27/ghost-broking-webinar