Motor insurers are being warned that more customers will become Ghost Broking victims if impersonation fraud defences fail to match worsening risk.
For several years, motor insurance providers have leveraged identity screening to great success, exposing perpetrators whose tactics are crafted to deceive. Concerningly though, the latest impersonation fraud data from National SIRA reveals that this fraud trend continues to rise. This is putting innocent policyholders at risk of hardships which formerly robust measures cannot ease.
Here, Synectics Solutions discloses the results of a National SIRA analysis – proving a cross industry correlation between victim and region, spotlighting customer impact and explaining the best way to reverse this damaging form of Ghost Broking.
- What does Ghost Broking look like in motor insurance? [Skip ahead]
- Is ID theft out of control in motor insurance? [Skip ahead]
- Is there is a correlation between postcode and impersonation fraud? [Skip ahead]
- Why are victims absorbing the cost of impersonation fraud? [Skip ahead]
- What can be done better to mitigate Ghost Broking? [Skip ahead]
What does Ghost Broking look like in motor insurance?
Ghost Broking is a major fraud strategy concern for motor insurance providers. Taking several subtle guises, here we are concentrating on impersonation fraud which involves the identity of a law-abiding victim being compromised. An offender adds a vehicle to a victim’s policy, paying a low premium and remaining untraceable should the vehicle be used in a crime.
Are ID theft and Impersonation fraud out of control in motor insurance?
Although impersonation fraud is on a rapid incline in motor insurance, its trajectory is not unstoppable. Experts cite the deepening cost of living crisis and exploitation of AI as triggers and emphasise that with syndicated data and agile responses, motor insurers can flatten the peak.
Is there is a correlation between postcode and impersonation fraud?
Analysis of proven impersonation fraud motor policies in National SIRA revealed indisputable rural “Victim” bias. The top twenty highest risk postcodes cover areas with lower population densities, fewer accidents and cheaper premiums. It is expected that inconspicuous, inexpensive policies will be targeted, but the extremes of the Ghost Broking crisis are staggering. An example is that of St Agnes, a tiny Cornish Island without a road network. Here, motor insurance crime should be non-existent, however:
- 20% of policies in the TR22 postcode are flagged as "Victim".
- This compares to the national average of 0.2% - equating to 40,408 policies.
The trend continues in other rural areas:
- 12.16% of policies in KW13 - a region in the Scottish Highlands - are flagged as "Victim".
- 7.17% of policies in FK21 - within the Loch Lomond and the Trossachs National Park - are flagged as "Victim".
Conversely, densely populated neighbourhoods of London, Cardiff and Newcastle have less than 0.01% of Victim cases.
Why are victims absorbing the cost of impersonation fraud?
Ghost broking is costing customers doubly. The ubiquitous “zero-tolerance” approach to fraud elimination can mistakenly flag victims as offenders. Compounding this, waves of fraudulent policies in otherwise low-risk postcodes are unfairly driving up premiums. Providers have a duty to protect customers from fraud, but also to offer competitive pricing and a stress-free experience.
What can be done better to mitigate Ghost Broking?
Chris Hallett, Head of Special Investigations Unit at Synectics Solutions says that “staying vigilant, proactively identifying the victims of impersonation fraud and sharing this intelligence with others is key to protecting the innocent victims, ensuring they are treated accordingly and fairly both at an individual and geographical level”.
To get the UK’s highest-risk postcode data for fraudulent motor insurance policies, click below. Or to discuss how to reduce risk in the management of impersonation fraud, click here.
