The cheapest car insurance premium 22-year-old Lizzie can find using a comparison site is £2,680. It’s not surprising that her quotes are high, though.
The catering assistant from Leeds has only two years of driving experience and three points on her licence for speeding.
So when she is offered cover for her Seat Leon FR for just £860.63, it 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 motor insurance
The quote has come from a ‘ghost broker’ selling worthless car insurance on social media site Instagram.
The crooks lure in motorists with offers such as ‘70 pc discounts’ and guarantee to insure drivers at rock-bottom prices.
But the insurance scam leaves victims uninsured and at risk of hefty fines and even a driving ban.
The fraud, which investigators say is soaring, is also adding around £50 to the cost of all policies as firms recoup losses.
Web of lies
Whereas ghost brokers used to post flyers in telephone boxes or approach victims in pubs, they are now touting for business on social media sites such as lnstagram, Facebook and Twitter.
In some cases the scammers will just pocket the money and send fake documents to the customer.
In others they will approach insurers for quotes, but provide falsified details to get a cheaper deal. This means the policy would be invalid should the customer ever need to claim.
Scam: A ghost broker on Instagram offering cheap car insurance
A quick search for ‘cheap car insurance’ on Instagram yielded dozens of results.
Posing as ‘Lizzie’, I find a broker using the name @car_insurance_specialists. The account has nearly 2,000 followers and promises to ‘beat your current quote by around 50 per cent or more’.
But with the help of insurer LV=, I soon find the bargain price offered is a sham. The firm’s data experts track the car registration number I provided to the ghost broker to monitor any requests for quotes.
They discover that, in a bid to drive down the price, the broker submits details that differ from the information I gave them.
It claims Lizzie is a married chartered accountant who lives in Cornwall, rather than a catering assistant from Leeds.
The broker also says her average mileage is just 4,000 miles a year — around half of the typical amount clocked up by UK drivers.
It means that if ‘Lizzie’ had purchased this policy, her insurance would be invalid and she could face a bill of thousands of pounds if her car was stolen or damaged.
Police can also seize and crush uninsured cars and slap owners with a £300 fine and six points on their licence.
Insurance crooks are luring in motorists with enticing offers such as ‘70% discounts’, ‘£100 referral fees’ and guarantees to insure young drivers at rock bottom prices
Another Instagram account called @Matrix.insurance, which has 1,500 followers, offers ‘Lizzie’ cover for £1,356.
There is a £200 admin fee — but even once this is added it is still a £1,124 saving on the best comparison site deal of £2,680.
The person running the account says that if I do not sign up within 48 hours, the premium will soar. ‘All quotes from Saturday are coming up triple — £3.6k plus.’ Yet experts say prices would not suddenly increase in this way.
A quick check on the City watchdog’s website (register.fca.org.uk) reveals that the Instagram brokers are not registered with the Financial Conduct Authority, which is a legal requirement.
No cover: The insurance scams leave victims uninsured and at risk of hefty fines and even a driving ban
Surge in fraud
In the past year alone, 21,000 fraudulent motor policies were reported to the Insurance Fraud Bureau — nearly 60 every day.
The organisation says ghost-broking scams now account for a quarter of its investigations, up from one in eight in 2016.
The number of ghost brokers uncovered by insurer LV= has jumped by two thirds over the past two years. It currently has 20 open organised fraud inquiries, totalling £2 million.
Insurers still have to pay for a third party’s damaged vehicle even if a driver has given them false details.
Firms can try to claim these back from the driver, but many end up having to foot the bill, and hike premiums to cover any losses.
If the other driver is injured, a claim will be made to the Motor Insurers’ Bureau, which pays out to victims of uninsured motorists. This is funded by insurers so costs are added to premiums.
Experts say insurers could be doing more to stop fake policies.
But scammers have been known to use stolen identities when applying for cover. Axa is currently investigating one ghost broker that uses names and addresses of real people to secure policies.
James Blackham, chief executive of insurer By Miles, says: ‘We want to see social media companies searching out and removing ghost brokers on their platforms today, and not just wait for legislation to enforce this.’
An Instagram spokesman says: ‘Fraudulent activity is not allowed on Instagram and we have removed the accounts brought to our attention.
‘We’re dedicating significant resources to tackle this industry-wide issue.’
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