On-line Automobile Insurance Rip-off The place Drivers Are Uninsured And Confronted With Driving Bans – nation.lk – The Nation Newspaper
The cheapest car insurance premium that 22 year old Lizzie can find on a comparison site is £ 2,680. It is not surprising, however, that their quotes are high.
The Leeds catering assistant has only two years of driving experience and three points on her driver's license for speeding.
So if she's offered a cover for her Seat Leon FR for just £ 860.63, that sounds too good to be true. And it is.
Undercover: Money Mail reporter Fiona Parker (pictured) posed as a 22-year-old driver struggling to find affordable car insurance
The quote is from a "ghost broker" who sells worthless car insurance on the social media site Instagram.
The crooks lure motorists with offers such as "70 pcs. Discount" and insurance guarantees at rock-bottom prices.
But insurance fraud leaves victims uninsured and risks heavy fines and even a driving ban.
The fraud, which investigators say can skyrocket, also adds around £ 50 to the cost of all policies as companies offset losses.
Web of lies
While ghost brokers used to post leaflets in phone booths or address victims in pubs, today they advertise their business on social media sites such as Instagram, Facebook and Twitter.
In some cases, the scammers simply pocket the money and send the customer forged documents.
In others, they will turn to insurers for quotes but fake claims to get a cheaper offer. This means that the policy would be void should the customer ever make a claim.
Scam: A ghost broker on Instagram offers cheap auto insurance
A quick search for "cheap auto insurance" on Instagram yielded dozens of results.
Pretending to be "Lizzie" I find a broker by the name of @car_insurance_specialists. The account has almost 2,000 followers and promises to "exceed your current offer by about 50 percent or more".
But with the help of the insurer LV = I quickly find the bargain price offered a shame. The company's data experts are tracking the license plate number I provided to the ghost broker to monitor all requests for quotations.
They find that in order to bring the price down, the broker is providing information that is different from the information I have given them.
It claims that Lizzie is a married accountant who lives in Cornwall and not a catering assistant from Leeds.
The broker also says their average mileage is only 4,000 miles per year – about half the typical amount British drivers drive.
This means that if "Lizzie" had this policy, her insurance would be void and she would be faced with a bill for thousands of pounds if her car was stolen or damaged.
Police can also seize and crush uninsured cars and beat owners with a fine of £ 300 and six points on their driver's license.
Insurance fraudsters lure motorists with tempting offers such as "70% off", "£ 100 agency fees" and guarantees to insure young drivers at rock-bottom prices
Another Instagram account called @ Matrix.insurance with 1,500 followers offers “Lizzie” coverage for £ 1,356.
There's an administration fee of £ 200 – but even when that is added you are still saving £ 1,124 on the best comparison offer of £ 2,680.
The person running the account says that if I don't sign up within 48 hours, the rewards will skyrocket. "All quotes from Saturday are tripled – £ 3.6k plus." However, experts say prices would not suddenly go up that way.
A quick check on the City Watchdog website (register.fca.org.uk) shows that the Instagram brokers are not registered with the Financial Conduct Authority, which is required by law.
No insurance coverage: Insurance fraud leaves victims uninsured and risks heavy fines, including a driving ban
Increase in fraud
In the past year alone, 21,000 fraudulent car policies were reported to the Insurance Fraud Office – almost 60 every day.
The organization says that ghost advertising fraud now accounts for a quarter of investigations, up from one in eight in 2016.
The number of ghost brokers uncovered by the insurer LV = has risen by two thirds in the last two years. It currently has 20 open organized fraud inquiries totaling £ 2 million.
Even if a driver gave false information, the insurer will have to pay for the damaged vehicle of a third party.
Companies can try to reclaim these from the driver, but many have to pay the bill and increase the premiums to cover losses.
If the other driver is injured, a claim will be made with the motor insurance office, which will pay out to victims of uninsured motorists. This is funded by the insurers so the cost is added to the premiums.
Experts say insurers could do more to stop counterfeit policies.
However, fraudsters are known to use stolen identities when applying for coverage. Axa is currently investigating a ghost broker that is using real people's names and addresses to back up policies.
James Blackham, CEO of insurer By Miles, said, "We want social media companies today to find and remove ghost brokers from their platforms rather than just waiting for law to enforce."
An Instagram spokesperson said: "Fraudulent activity is not allowed on Instagram and we have removed the accounts that we were made aware of.
"We are devoting significant resources to addressing this industry-wide problem."
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