The rise of digitalization in recent decades meant easier and more accessible insurance policies and decreased the need for face-to-face contact. However, this has opened doors to new forms of an insurance scam, one of them known as ghost broking.
What is ghost broking?
Ghost brokers pose as legitimate insurance brokers and trick unsuspected customers into purchasing falsified car insurance policies. How this works is the ghost brokers will typically tell customers that they’re willing to handle the monotonous process of finding the lowest rate for them. And many times, the price does seem too good to be true afterwards, but without much of a reference point for insurance fees, vulnerable people fall victim to this quite often.
In reality, the ghost broker either creates a legitimate policy and cancels it once they show “proof” to the customer; or the broker will use a single policy for multiple people. This leads the victims to believe that everything is taken care of because they’d seen official-looking documents. And the scam only unravels once the customer reaches the claims process. At this point, either the carrier will be left with more exposure than they bargained for, or the victim won’t have a valid insurance policy when they need it most.
Who Is at Risk?
Anyone with a high premium is a potential victim, particularly young drivers, former convicts, or immigrant families who are unfamiliar with their new country’s culture and national languages. Brokers will target them using social media with ads promising low premiums and full coverage. Some even create Instagram profiles with massive followings claiming that customers can save up to 50% on premiums using their services. Yet, for the unsuspected victims who are usually in a financially vulnerable situation, this may seem like the best choice. In 2021 the Insurance Fraud Bureau has confirmed 517 ghost breaking policy cases amounting to 1 million pounds, but the actual amount is likely much bigger.
How do ghost brokers misuse carriers’ infrastructure?
Ghost brokers create policies for multiple people, exploiting the lack of automated mechanisms that would examine if policyholders’ emails and phone numbers overlap. They can use identical contact information for dozens of people, but will create customer accounts through different channels. If the insurer doesn’t centralize data in one database, different teams will have troubles comparing it and catching a fraud at an early stage. Moreover, in a large insurance company, it’s unlikely that manually checking customers’ information is a plausible solution because of its tedious nature.
What can you do to prevent ghost broking?
Using AI and latest fraud detection technology can save carriers time, money and reputation. One of the solutions is FRISS Risk Assessment at Underwriting. Using real-time risk assessment, suppression lists and third-party data has proven to be effective against ghost broking scam. Moreover, leveraging Network Viewing capabilities allows to track many types of similarities and will automatically link all of the data from your book of business, to form a web of connected information. It shows correlations in claims filed, witnesses present, locations, items involved and more. But even more important for preventing ghost broking, the Network Viewer tracks contact information too. If a ghost broker had created dozens of policies with the same contact information, Network Viewer will show all the connections of the used contact info.
Although ghost brokers main target are individual customers, their actions can have massive consequences for insurers. Not only do carriers lose money and time, but on the long run your reputation and relationship with honest customers is jeopardized. By investing in latest AI technology you can focus on things that truly matter: your customers and your bottom line.
If you are interested in learning more on how FRISS can help you, click on the image below to request demo of Network Viewer and discover the future of fraud investigations.