Ghost-broking was first noticed by insurers around five years ago as it started to emerge and become widespread alongside the rapid proliferation of aggregator websites.

After initially catching the industry by surprise, given the largely siloed nature many companies favour working in, steps to tackle the problem are now being taken thanks to collaborative databases, publicity and the work of the City of London Police’s Insurance Fraud Enforcement Department (IFED).

But crucially, no silver bullet currently exists. For customers cheaper premiums are the core appeal. In the eyes of anyone unwittingly using ghost-brokers, the lure of cheaper policies for many financially stressed households outweigh any inherent risks. The vast majority of customers simply will not identify the ghost-broker because of their relative sophistication.

Ghost-brokers appear to favour using manipulated quote data on aggregator or insurers’ own websites rather than incepting policies via call centres. They are fast, inventive, persistent, resourceful and quick to arrange new cover if they’re detected.

Tackling ghost-broking is not a back-office activity – fighting it is vital if insurers are going to maintain a competitive position and stop losses hitting profits.

It hinges on the adoption of real-time automated fraud systems and controls, avoiding any applications flagged as high fraud risk, with policy and claims fraud managed by one single team. Detecting ghost-brokers should form part of an end-to-end strategy of fraud prevention that begins with when you first engage with a customer, includes Point of Sale, and extends through to Point of Claim and renewal.

Holistic fraud prevention should not be aspirational – it should be regarded as a core competency across the industry. In this instance, the insurer saw a 96% reduction in monthly ghost-broking exposure, daily blocks of significant quotes were returned to ghost-brokers and a 100% reduction in ghost-broker chargebacks were recorded.

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