The link between fluctuating economic conditions and increased insurance fraud was thrown into sharp relief by the recent study conducted by LexisNexis Risk Solutions into the targeting of insurance customers by ‘ghost brokers’. On hand to dig into the current lay of the ghost broking landscape, senior director of product management, UK & Ireland, James Burton (pictured), highlighted how the current economic crisis is creating new opportunities for fraud threat actors.
Ghost brokers are becoming more sophisticated in a lot of different ways, he said, particularly in how they approach vulnerable people. Meanwhile, more customers are falling within the broad definition of vulnerability largely due to increased financial pressures or the challenges presented by new technologies transforming the insurance buying process.
“I think this economic crisis has probably focused attention on those customers that are making difficult financial decisions and weighing up which bills they can pay,” he said. “It’s a really difficult time and it creates an opportunity for more ghost brokers to push the envelope in terms of how they are targeting different groups of people.”
He cited LexisNexis Risk Solution’s research which uncovered that 54% of surveyed 17–34-year-olds in Ireland have been targeted and tempted by an advert for fake insurance on social media, while 16% went on to buy insurance through one of these adverts. A lot of the discourse around ghost broking spotlights the vulnerability of young people to this fraud activity, he said, especially given the prevalence of social media and the opportunities it presents for ghost brokers to connect with a large audience.
“Some of that is driven by general financial pressures for younger people,” he said. “Going through university is difficult, getting on the housing ladder is difficult – and then you throw rising inflation, the cost-of-living crisis and energy prices into the mix. It just creates this melting pot of financial pressure which makes people feel pressured into making different financial decisions.”
To do battle against ghost broking requires a two-sided approach, Burton said. On one side of the coin, there’s the ‘stick’ of regulation and education which can actively tackle ghost brokers while on the other is the ‘carrot’ role of proactive data solutions. And it is only with those two sides working in tandem that real progress can be made, and insurance customers can be protected.
Burton noted that while even the best data solutions will likely never be able to completely eradicate the scourge of ghost broking, the mandate is for them to reduce it down to the absolute minimum. It’s a never-ending battle, he said, because the ghost brokers who target vulnerable individuals run the gamut from opportunistic one-offs to what is essentially organised crime gangs comprised of sophisticated threat actors.
“For me, it comes down to the right use of data and making that data accessible to the market as well,” he said. “For instance, we have a product called Emailage Rapid that allows you to use the email address provided to you to gain greater confidence that you are engaging with the person you think you’re engaging with.
“That’s really important and I think people expect that to be available as well, they expect insurance providers to do that due diligence so they know the person they’re providing quotes for is exactly who they say they are – and Emailage helps with that.”
There’s a lot more that can be done to mitigate insurance fraud, Burton said, and he strongly believes that given the present economic upheaval, insurers have a duty to support and protect their most vulnerable customers.
It has been great to see the work done by the likes of the Insurance Fraud Enforcement Department (IFED) and the Insurance Fraud Bureau (IFB) to crack down on ghost broking sites, Burton said. He emphasised how important it is that the industry continues to take a collaborative approach to offset the impact of insurance fraud on customers.
Underpinning the work being done by such associations is their emphasis on educating consumers on what to look out for and how to protect themselves from fraudsters. The wider industry also has an important role to play in educating customers about the value of insurance, Burton said, and on why it’s so critical to have the right coverage – to protect you in your time of need.
“As someone described it to me recently, insurance should be silent and behind-the-scenes, and then step in when you are at your most vulnerable,” he said. “That goes hand in hand with repositioning that education piece around the importance of insurance and why it’s so critical not just for you, but also for protecting those around you.
“And part of that education is [relaying] that the process of buying insurance is complex and there are nefarious players out there that will seek to steal or clone your identity. It’s such a tricky balance, how you as a consumer navigate this whole market which is why education is so important. Responsibility for that education falls on insurers, on organisations like the IFED and the IFB, on companies like us – but also, I think brokers have a really important role to play.”
Brokers have the most hands-on interaction with customers, he said, and as such have increased opportunities to engage in one-on-one conversations that educate and inform consumers. Brokers are well-positioned to lead conversations around the importance of having the right coverage solutions and the solutions available to protect customers – and in doing so, cement their role as trusted and valued advisors.
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