Filed Under:Agent Broker, Agency Management

Who You Gonna Call?: Insurers Aim to Bust Ghost-Brokering Practice

Latest trend in underwriting fraud can rob insurance policyholders.

Stuart Rose is Global Insurance Marketing Director at SAS.

Everyone wants cheaper auto insurance policies. We have all seen the commercials from Progressive, Geico, State Farm, Allstate, and many others offering low-priced insurance. But the number of drivers desperately looking for a better deal has also led to an increase in underwriting fraud.

A recent exposé of this criminal activity revealed that many customers could be driving uninsured after having been tricked into paying for a faulty or bogus insurance policy. A ghost broker will offer significantly cheaper insurance than legitimate insurance agents by altering key quote details to get a lower premium for the insured. For instance, a ghost broker might transpose the applicant's year of birth, changing 1968 to 1986.

Ghost brokers operate through websites or small ads that target young motorists who face rocketing premiums or individuals who lack an understanding about the way the insurance industry works. These ghost brokers then charge the consumer a fee for their service. To justify why they can offer lower prices, many ghost brokers claim to be an insurance company staff member, explaining that the reduced rates are due to staff discounts. One red flag for customers to watch out for is that many ghost brokers will ask for an initial payment in cash.

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